Six months have passed since the Trump administration declared “Liberation Day” on April 2, 2025, introducing sweeping global tariffs across a wide range of imported goods.
The initial proposals were quickly adjusted following reactions from the market and business community. Since then, some trade deals have been struck, but more importantly, a fairly constant stream of revisions has been seen across specific nations and product categories.
One thing is certain: The most pessimistic predictions about the impact of the new tariff policies have not come to pass.
Axios noted the following on Oct. 2:
“The big picture: Now the economy is growing at nearly a 4% rate, unemployment remains historically low, inflation’s still under 3% and tariffs are projected to generate more than $400 billion a year in revenue.
“Trump’s attempt to change the global trade order caused some pain for U.S. importers and for everyday Americans. But it has also, for now, worked far better than even some of the optimists expected.
“Yes, but: The trade war isn’t over, nor has it even really reached the end of the beginning.
“New tariffs are still being implemented, collections aren’t fully matching what’s been imposed, and a looming Supreme Court case could end up throwing much of the program out the window entirely.
“But the fundamental argument—that the U.S. can impose huge tariffs that generate big, deficit-cutting revenue without triggering a recession—is so far on track.”
Reuters provided this perspective on Sept. 30:
“As we enter the final quarter of a turbulent 2025, one of the biggest puzzles of the moment is how the U.S. economy is growing at almost 4% without creating any jobs. The answer may lie in artificial intelligence, but proving that will be a challenge.
“While U.S. markets suffered a near heart attack over President Donald Trump’s tariff plans in April, they have since roared back, with the S&P 500 rallying by a whopping 33% from its lows. Meanwhile, the U.S. economy is on track for 3.9% annualized GDP growth as the third quarter comes to a close.”
FIGURE 1: U.S. GDP PROJECTION TRACKING AT 3.9% FOR Q3 2025
Source: Reuters
CNBC offered at least a partial explanation for why GDP appears set to rise in Q3 despite a stagnant labor market and the drop in the Chicago Fed’s U.S. Financial Conditions Index, shown in Figure 1:
“For the markets and economy, much of the first half of this year was dominated by President Trump’s trade war. The abrupt shifts in global economics and manufacturing relationships led to wild swings in U.S. imports and exports, and as a result, in GDP readings. …
“When there is a sharp rise in imports, which occurred during the frontloading [earlier in 2025], the greater demand is a negative contribution to GDP. That has made trade have a ‘quirky impact’ on the GDP data in Q1 and Q2 of this year, according to Peter Boockvar, chief investment officer of One Point BFG Wealth Partners. (Q3 GDP is not out until December.) ‘When imports fall, like we saw in August with goods, it actually lifts GDP,’ he said.”
In addition to strong corporate earnings growth, another positive factor is that overall consumer spending has held up well—even while consumer sentiment has weakened.
First Trust wrote the following in mid-September:
FIGURE 2: CHANGE IN PERSONAL CONSUMPTION EXPENDITURES (JAN.–AUG. 2025)
Sources: Bureau of Economic Analysis, Axios
Related Article: Can tariffs replace the income tax?
How are businesses adjusting to the new tariff regime?
For companies, the adjustment has been significant. Many manufacturers and retailers have faced higher input costs, forcing them either to accept tighter margins or to pass price increases along to consumers.
Supply chains, already under strain from geopolitical uncertainty, have had to adapt quickly—sometimes by reshoring production, other times by seeking alternative suppliers outside traditional trade partners. While some domestic industries—particularly in steel, aluminum, and certain segments of agriculture—have reported a temporary boost in demand, the broader picture has been one of strategic recalibration. Businesses reliant on global trade have been forced to navigate new channels, leading to uneven impacts across industries—benefiting some but challenging many more.
The broader economy has also felt the effects. Inflationary pressures have been persistent, with consumers paying more for everyday items—from appliances to food staples—squeezing household budgets and weighing on consumer sentiment.
KPMG recently published the “Tariff Pulse Survey: September 2025,” providing additional insight. The report noted that “after six months of new tariffs, U.S. businesses are still grappling with fallout: shrinking margins, declining sales and price increases.” To find out how “companies are adapting and building resilience to mitigate tariff impact since April 2,” KPMG interviewed 300 business leaders. Several major findings emerged:
- “Tariffs are squeezing U.S. businesses’ profitability and demand.” 39% of companies are reporting margin declines, and 35% report weakening sales.
- “Foreign markets continue to take a hit but show signs of stabilizing.” 60% of companies are seeing a decline in foreign market sales.
- “63% [of companies] are actively considering reshoring operations to the U.S., but only 10% have taken action.”
- “Facing uncertainty, almost 4 in 10 businesses are pausing hiring.”
- “Tariff-driven price increases are here and will continue.” 44% have already increased prices, and 71% anticipate price hikes.
- “Businesses are optimizing supply chains and investing in automation.” 62% are reconfiguring supply chains, and 50% are observing an acceleration in industrywide innovation and automation.
- “Uncertainty is now the norm, bringing an opportunity to restructure.” 44% of companies highlight persistent uncertainty over tariffs, and roughly 70% have unrealized opportunities for operational improvements to address tariff-related issues.
What are the prospects for the economy moving forward?
Despite the tariff-related uncertainty, Wall Street strategists have generally raised targets for the S&P 500 going into year-end 2025, and many are optimistic about 2026—while acknowledging ongoing geopolitical and economic risks.
Goldman Sachs CEO David Solomon painted a cautiously optimistic picture in recent remarks, according to The Wealth Advisor:
“Despite short-term headwinds, Solomon said he expects the U.S. economy to maintain steady growth, with an acceleration possible by 2026. He pointed to multiple structural supports: robust fiscal spending, infrastructure investment, and major capital expenditures across sectors.
“‘The U.S. economy is in pretty good shape,’ he said, noting that GDP growth of 3.8% in the second quarter reflects solid momentum. He forecasted that growth would likely moderate to just under 2% going forward—a bit below historical averages but still consistent with healthy expansion.
“For advisors, the message is clear: while the rate of growth may slow, recession risk remains limited. Fiscal policy remains highly supportive, and private-sector capital spending continues to underpin productivity. However, Solomon cautioned that two key metrics warrant close monitoring—labor and inflation.
“‘You have to watch labor,’ he said, referencing early signs of weakness in the job market. ‘And you have to watch inflation—whether the impact of trade is a one-time price movement or something more significant.’”
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