4 Trump Policies That Could Reverse ‘Strong’ Economy Inherited From Biden

President Donald Trump claims he inherited a bad economy from former President Joe Biden. In his 2025 speech to Congress, published by Time, Trump stated, “We inherited from the last administration an economic catastrophe and an inflation nightmare.”

But statistics say otherwise. While inflation did rise under the Biden administration, many other markers pointed to a strong economy. And today, according to some experts, Trump’s policies are already reversing the strong economy that he inherited.

Check Out: Trump Wants To Replace Income Taxes With Tariffs: 2 Impacts on the Middle Class

When Trump stepped into office, he inherited an economy that Biden had largely bolstered. According to CNN, from February 2021 through December 2024, the economy added 16.6 million jobs, and employment passed pre-pandemic levels in June 2022. When Biden entered office, unemployment was at 6.8%, but that job growth meant that unemployment dropped below 4% for 27 months while he was in office.

Inflation grew during the Biden administration, and prices rose substantially. Interest rates climbed, reaching a 23-year high, and housing prices continued to climb. During the third quarter of 2024, the median sales price for a single-family home was 18% higher than it was in the first quarter of 2021. However, consumer spending maintained at a high rate, likely spurred on by increased employment and higher wages.

The stock market also thrived, meaning investors’ retirement accounts grew and signaled a strong overall economy.

See More: Who Would Benefit the Most from Trump’s Social Security Tax Plan?

Trump campaigned on bringing down grocery prices and boosting the economy. So far, his proposed and implemented policies are already having a tremendous effect — but maybe not the effect that voters were expecting.

On April 2, Trump announced tariffs on imports from most nations, prompting a three-day stock selloff that eliminated trillions in market value. The tariffs, which United States consumers pay in the form of higher prices for products, can increase inflation and the risk of a recession. When Trump announced a 104% tariff against China to begin on Wednesday, April 9, stocks fell again.

The tumultuous stock market means potential losses for investors, and individuals who are close to retiring or who are retired are now relying on smaller investment accounts, at least for the time being. The tariffs are hitting businesses hard, including small business owners who worry that their businesses won’t survive the tariffs. The overall uncertainty caused by the tariffs also makes it difficult for businesses to plan inventory and supply purchases, and may result in increased layoffs.

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Trump has already begun to implement mass deportations and is following through on his promise to crack down on illegal immigrants and close the country’s borders. But such mass deportations could negatively impact the United States economy.

Since the unemployment rate was already low at the beginning of Trump’s presidency, industries like the services sector have faced labor shortages, as reported by Invesco. In fact, NPR reports that more than 1 million noncitizen immigrants, one-third of whom do not have legal status, work in healthcare jobs in the United States. The healthcare industry already faces a staffing shortage, and deporting or scaring these individuals away from working in the field could lead to increased staffing shortages and reduced economic activity.

If laborers in industries like agriculture are deported, prices could increase, which could drive up inflation and strain consumers’ budgets. Alternatively, aggressive deportation could result in a smaller labor force that could cause a potential recession while driving up inflation.

Trump has also proposed eliminating income taxes for anyone making less than $150,000 per year. According to Newsweek, single Americans making $150,000 could save $24,000 per year if income taxes were eliminated.

While such savings would be a significant economic boost to the lower and middle classes, eliminating income taxes could have several other negative impacts. Since individuals would be paying less in taxes, corporations would be under less pressure to provide a livable wage.

Trump has suggested that his tariffs would make up for the deficit caused by not collecting income tax, but those tariffs are already causing stock market turmoil and mistrust and anger among Americans. It’s unclear how those tariffs will be implemented long term, which means future generations could inherit increased national debt if income taxes are eliminated.

In the name of eliminating wasteful government spending, Trump tasked Elon Musk with operating the Department of Government Efficiency. The Trump administration then offered buyouts and progressed to firing thousands of federal workers. The Trump administration told NBC that about 75,000 workers accepted the original federal buyout.

The Trump presidency’s sweeping actions are contributing to unemployment rates. In January 2025, unemployment was at 4%, according to Statista. By February 2025, it had risen to 4.1% — a small bump but one that reflects those government job losses, and which could increase as funding continues to be scrutinized and cut.

The country is in a very uncertain time, and Trump has made some unprecedented decisions during his first 100 days in office. While he inherited a largely strong economy with low unemployment and a robust stock market, his actions and his proposed policies could be swiftly changing that landscape.

Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

4 Trump Policies That Could Reverse ‘Strong’ Economy Inherited From Biden

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