Trump's New Trade Order Is Here. Will It Work?

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While Powell's decision to hold interest rates probably irritated Trump, economic theory suggests that lowering them with the US economic cycle at full employment would be likely to increase inflation and the cost of living for US consumers. A survey by Bloomberg economists suggests that US GDP growth forecasts are lower since April 2025, specifically because of its tariff policy.

In terms of boosting US employment, the US administration can point to significant wins in the pharmaceutical sector. In July, British-Swedish drugmaker AstraZeneca announced plans to spend $50 billion expanding its US research and manufacturing facilities by 2030.

The announcement follows a similar pledge from Swiss pharmaceuticals firm Roche in April to invest $50 billion in the US over the next five years.

Tougher times for US manufacturing

The impact of tariffs on traditional US manufacturing industries is less positive.

The Ford Motor Company has warned that its profits will see a sharp drop. This is largely down to a net tariff impact that the firm says will cost it $2 billion this financial year. This is despite the company making nearly all of its vehicles in the US.

Firms such as Ford are seeing an increase in tariff-related costs for imports. This dents their profits as well as dividends to shareholders.

In recent weeks and months, the US has announced major new trade agreements, including with the UK, Japan, South Korea and the EU. Talks on a trade deal with China continue. But rather than trade deals , these announcements should be thought of as frameworks for trade deals. No legally binding documents have been signed to date.

It will take many months before a clear picture emerges of how these bilateral deals will affect the US trade deficit overall. Meanwhile, in Washington, a federal appeals court will hear a case from two companies that are suing Trump over the use of his International Emergency Economic Powers Act (IEEPA) of 1977.

VOS Selections Inc, a wine and spirits importer, and Plastic Services and Products, a pipe and fittings company, are arguing that the president has“no authority to issue across-the-board worldwide tariffs without congressional approval.”

With so much in play, it is difficult to judge whether Trump's tariff policy can be viewed as a success. Higher tariff revenues from imports, as well as significant investments from the pharmaceutical industry, can be seen as clear wins.

But increasing consumer costs through rising inflation, as well as tariff costs hurting US manufacturers, are clear negatives. While several framework trade deals have been announced, the real devil will, of course, be in the details.

Perhaps the greatest impact of the tariff policy has been the uncertainty of this new approach to trade and diplomacy. The Trump administration views trade as a zero-sum game. If one side is winning, the other side must be losing.