Key economic promises of US President Donald Trump remain unfulfilled nearly two years into his second term, an analysis by the Institute for German Economics (IW) shows. According to the document, the tariff policy has not led to a lasting reduction in the US trade deficit, foreign investment has decreased, and job creation has slowed.
The midterm elections for Congress on November 3 are unlikely to lead to a significant change in Washington's course. Analysts point out that even if the opposition wins a majority, it will probably not have the two-thirds necessary to overcome a presidential veto and change the tariff policy.
The deficit remains high despite the tariffs
In August 2026, the US trade deficit reached $130 billion. This is about $35 billion more than in August 2024.
The composition of the deficit has changed. The share of the European Union has decreased from 20 to 7 percent, mainly due to increased American exports to the European market, especially energy. China's share has fallen from 29 to 14 percent. At the same time, the trade deficit with Germany has changed relatively little – $5.8 billion in August 2026, down from $6.6 billion two years earlier.
Less investment and slower job growth
Foreign direct investment in the United States was $248 billion in 2025. That was down 8.2 percent from the previous year and 18 percent from the 2015-2024 average. Investment in U.S. manufacturing increased from 2024 but remained about a fifth below the decade-long average.
The U.S. economy grew 2.3 percent in 2025, after growing 3 percent in 2024. However, the labor market created an average of about 10,000 jobs per month last year, compared with about 200 000 in 2023. According to IW, investments are heavily concentrated in the artificial intelligence sector, which makes the growth model more vulnerable.
Debt exceeds $40 trillion
The US national debt has exceeded $40 trillion for the first time. At the beginning of 2026, it was equal to 123 percent of gross domestic product, and annual interest costs have exceeded $1 trillion.
According to the analysis, the war with Iran and tax cuts are among the main factors putting pressure on public finances. Higher interest rates could further increase the cost of debt servicing.
„The US remains an important trading partner for Germany and the EU. "However, uncertainty will continue after the midterm elections," says Samina Sultan, a foreign trade expert at IW.According to her, German companies should prepare to maintain the current course of economic and customs policy at least until January 2029.
Sources: bta.bg