President Trump, a lover of tariffs, has become even more enthusiastic about their benefits in recent weeks. In an economic speech in Detroit on Tuesday, Trump mentioned the tariffs more than two dozen times and said the tariffs had brought trillions of dollars in investment to the country. A series of social media posts followed in which he credited them with the country’s strong economy, its shrinking trade deficit and its booming stock market.
“The US markets just hit another all-time high – ALL!!!” the president wrote on social media last week. “THANK YOU VERY MUCH, MR. TARIFF!!!”
However, there is little evidence in the data that tariffs produce widespread economic benefits. U.S. growth has been strong in recent months, but economists say that’s largely due to the boom in artificial intelligence. Building massive data centers is boosting investment, while rising AI stocks are making Americans invested in the stock market richer, leading to higher spending on goods and services.
New tax deductions that came into force last year also encourage investment. But manufacturing — the sector the tariffs are intended to help — appears to be struggling. Surveys show manufacturing contracted for the 10th straight month in December and spending on new factories has slumped since the Biden administration.
The United States has steadily shed factory jobs in recent months. Any gains in the country’s anemic labor market last year came almost entirely from the health care sector. Smaller manufacturers in particular appear to be suffering from the higher costs of input materials such as metal and machinery that are affected by the tariffs.
Several economists said the U.S. grew not because of tariffs but in spite of them.
Gita Gopinath, a Harvard economist and former first deputy managing director of the International Monetary Fund, said the AI boom has “basically offset the burden of tariffs.”
“Consumption growth is supported by wealth gains in the stock market, and so the question for 2026 is whether this story will continue,” she said.
Mark Zandi, chief economist at Moody’s Analytics, said U.S. growth is “entirely due to AI,” adding that technology and healthcare are “driving the train.”
“This has nothing to do with trade,” he said.
Some tariff advocates have argued that the measures will ultimately benefit the manufacturing sector, but that uncertainty over whether import tariffs will remain in place has so far undermined their effectiveness.
Jeff Ferry, chief economist emeritus at the Coalition for a Prosperous America, a trade lobbying group that supports tariffs, noted that many of the president’s tariffs have only been in effect for about six months.
“The goal of the tariffs is to restart U.S. production,” he said. “That takes time.”
Mr. Trump and his supporters take the opposite view, arguing that the strong economy is proof that the president’s economic plan is working perfectly. It is said that the president managed to introduce the highest tariffs in a century with minimal inflation and a booming economy. In social media posts, the president repeatedly emphasized the benefits of tariffs and tried to argue that the Supreme Court should not limit his use of emergency legislation to impose tariffs, a case that could be decided soon.
Although the stock market immediately plunged after Mr. Trump announced his steepest tariffs in April, it has recovered to new highs. In recent months, the trade deficit has shrunk dramatically, reaching its lowest level since 2009 in October. The decline in imports boosted U.S. gross domestic product in the third quarter and pushed up estimates for fourth-quarter GDP. Mr. Trump highlighted both the strong economic growth numbers and the shrinking trade deficit in his speech on Tuesday.
However, some of the recent improvement in economic performance and the trade deficit may be the result of volatility caused by dramatic changes in policy.
U.S. companies caused a surge in imports early last year as they rushed to build inventories before expected tariffs arrived. As a result, economic output fell into negative territory in the first quarter. The reason: Gross domestic product only measures goods produced domestically, so imports are deducted from this measure to avoid double counting.
When the tariffs went into effect, imports fell sharply, the trade deficit fell, and GDP increased. However, if you factor out the strong fluctuations over the course of the year, last year looks more normal.
For many economists, the question is in which direction these key figures are heading and whether companies will continue to import less.
Brad Setser, an economist at the Council on Foreign Relations, said economists needed more data to separate the impact of the earlier import surge from a more permanent adjustment in trade. So far, recent trends appear to reflect “crazy chaos” in trade trends rather than a positive change for the economy, he said.
Determining the impact of tariffs will be complicated by other trends in the coming year. Lower interest rates will most likely help stimulate the U.S. economy, as will individual tax cuts and provisions allowing companies to write off their investments.
If the economy and stock market remain strong, this could solidify the use of tariffs as a policy tool in the coming years, regardless of whether tariffs actually help manufacturers. Many voters will likely base their stance on tariffs on how the economy as a whole is doing, without taking a closer look at what policies are actually causing those impacts.
That appears to be the case with Mr. Trump, who said on Tuesday that the “historic use of tariffs” was one of the main reasons for the country’s “incredible success.”