US President Donald Trump doubled down on his financial coverage agenda as he delivered the newest State of the Union (SOTU) tackle to the US Congress on Tuesday. Trump stated that the US “is again, larger, higher, richer and stronger than ever earlier than” and asserted that “the golden age of America is upon us”.
“In the present day, our border is safe, our spirit is restored, inflation is plummeting, incomes are rising quick. The roaring economic system is roaring like by no means earlier than, and our enemies are scared, our navy and police are stacked, and America is revered once more, maybe, like by no means earlier than,” stated Trump within the longest recorded SOTU tackle that ran for one hour and 48 minutes.
What’s the SOTU? Why does this one matter?
The SOTU is a constitutionally-mandated occasion the place a US President is meant to supply a snapshot of how the nation is faring throughout completely different areas of concern. Usually this occurs as soon as yearly.
This SOTU comes at a time when Trump’s approval scores have taken a heavy beating, and the Republican Occasion (to which Trump belongs) has seen a number of electoral losses to Democrats since November final 12 months. To make issues worse, the US Supreme Court docket, which has many justices appointed by Trump, has only in the near past dominated the majority of his tariffs unlawful — a call that has embarrassed him and compelled him to work with the US Congress on the difficulty of imposing tariffs.
Worsening public notion of Trump’s presidency may find yourself hurting the Republicans within the midterm elections within the US Congress in November.
If the Democrats can flip majorities within the Home of Representatives and the Senate in November, it couldn’t solely spell the death-knell for Trump’s coverage agenda for the remainder of his time period but additionally open him up for impeachment proceedings.
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In different phrases, the SOTU was Trump’s massive alternative to inform the American public that his insurance policies are working for them.
What’s the state of the US economic system?
Trump’s tackle on the economic system will be damaged into 4 broad classes:
1. Affordability & Welfare
A key motive why People voted Trump again to workplace in 2024 — after rejecting him on the finish of his first time period in 2020 — was the excessive value of dwelling throughout President Biden’s time period, which noticed inflation rise to historic ranges. Inflation, the speed at which costs rise from one 12 months to the subsequent, rose to a peak of 9.1% in June 2022 within the wake of the Russia-Ukraine warfare and related provide constraints, at the same time as authorities stimulus (learn financial dole within the fingers of individuals) elevated demand.
By the point Trump received, the inflation price had simmered all the way down to lower than 3%. Nonetheless, the deceleration within the inflation price reversed after Trump introduced “reciprocal” tariffs in April final 12 months, and since then, inflation has remained sticky. Larger costs have been primarily due to increased tariffs, as greater than 90% of all tariffs have been paid by American shoppers and corporations.
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Larger-than-anticipated inflation additionally triggered the US Federal Reserve (their central financial institution) to keep up rates of interest at elevated ranges, thus hurting debtors (be it for houses or automobiles).
The scenario has improved a bit over the previous few months, and the Fed reduce rates of interest, and inflation moderated a bit in January.
“Mortgage charges are the bottom in 4 years and falling quick, and the annual value of a typical new mortgage is down virtually $5,000 simply since I took workplace,” stated Trump.
Additionally aimed toward bettering affordability, Trump has supplied the “largest tax cuts in American historical past” by way of his One Large Lovely Act. These embody provisions like no tax on suggestions, no tax on time beyond regulation and no tax on Social Safety for senior residents. Trump has additionally launched what he calls the “Nice Well being Care Plan” that permits People to purchase pharmaceuticals at “the bottom value wherever on the earth”.
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Trump additionally reminded us in regards to the so-called Trump Accounts, that are tax-free funding accounts for each American baby that may obtain an preliminary sum of $1,000. “With modest, further contributions, these younger individuals’s accounts may develop to over $100,000 or extra by the point they flip 18,” promised Trump.
2. Financial Output and Progress
Trump has repeatedly claimed that below Biden, the US was a “lifeless” economic system and is now the “hottest” one. Given the scale of the US economic system, its financial output progress has been stunning everybody for years, particularly for the reason that Covid pandemic, when it was the one main economic system that managed to stage a real “V-shaped” restoration — that’s, the very subsequent 12 months, US GDP went again to the pre-Covid path in absolute phrases.
Whereas the US has continued to increase at an enviable tempo, given the actual fact that it’s the world’s largest economic system. Nonetheless, opposite to Trump’s claims, the GDP progress price moderated in 2025. Whereas he didn’t say so, he did blame the Democrats for the federal government shutdown final October, and in consequence, “two factors we misplaced on G.D.P., which in all probability made them fairly completely satisfied, truly.”
Trump additionally reiterated that he stored his promise to “drill, child, drill” and that the US crude oil manufacturing had gone up by greater than 600,000 barrels a day. He reminded that gasoline costs, which “reached a peak of over $6 a gallon in some states below my predecessor”, have been now “under $2.30 a gallon in most states”.
3. Employment
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Between the Trump administration’s crackdown on immigrants and, extra broadly, on immigration, coupled with the impact of Synthetic Intelligence within the office, employment within the US economic system has remained in a “low rent and low fireplace” zone. In different phrases, each the hiring price and layoffs price are low. In different phrases, whereas the general financial progress has been spectacular, it has not led to lots of job creation. This has not created an enormous drawback as a result of in the course of the latest excessive inflation and excessive progress section, there have been virtually two job vacancies for each unemployed individual.
General, as the information exhibits, employment has grown and, as Trump stated, “we have now extra jobs, extra individuals working right now than ever earlier than within the historical past of our nation.”
Nonetheless, most of those jobs have been created in service sectors equivalent to personal well being and schooling (up by 773,000 throughout 2025), whereas manufacturing jobs (a key concern for Trump) have come down by 83,000 in the course of the 12 months.
4. Tariffs
After the snub by the Supreme Court docket, a rational plan of action for Trump would have been to relinquish his tariff agenda. In any case, it was hurting each the American shoppers in addition to Trump’s personal political standing with out even reaching its major objective: the discount within the US commerce deficit.
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Nonetheless, Trump doubled down on using tariffs, claiming that they allowed him to safe commerce offers for the US and likewise led to benchmark inventory indices rising to historic highs in the course of the 12 months.
He additionally claimed that “as time goes by, I consider the tariffs, paid for by overseas international locations, will, like previously, considerably change the modern-day system of revenue tax, taking an excellent monetary burden off the those that I really like.”
This can be a far cry. For one, tariffs are paid by People. Furthermore, revenue tax contributed over $2.7 trillion in FY25 whereas tariffs introduced in lower than $200 billion.
Is Trump actually making America nice once more? Or will his time period be seen as the beginning of the US decline? Regardless, are there any classes for India to be taught from Trump’s coverage initiatives?
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