Grading Trump’s Midterm Economy
This piece originally appeared in The Detroit News on March 26, 2026.
May you live in interesting times. That’s how the ancient Chinese (supposedly) cursed their enemies. It’s hard to think of a more politically interesting time in the lives of a Gen-Z student than the first 14 months of the second Donald Trump presidency. Was it a curse or a blessing? Or a little bit of both? Is this the start of a new “golden age” for America? Or are we headed to a deep recession?
This piece examines President Trump’s economic policies since his return to the White House. Forty-eight Northwood University students examined four key areas of public policy where major reform has either started, has been planned for the next three years (contingent upon the outcome of the 2026 midterm elections), or is currently stalled but needed “bigly.”
Trump’s presidency is controversial. So was Lincoln’s. With enough support from the Supreme Court, it could be as disruptive as Franklin D. Roosevelt’s. If his executive orders become laws, Trump could be more consequential than Reagan. The border is secure. Inflation is down. Productivity is up. The economy is booming. His efforts to drain the swamp, however, were stalled by several judges.
Based on historical evidence from previous tax cuts (Kennedy-Johnson 1964, Reagan 1981 and 1986, Clinton 1997, and Trump 2017), this is the most promising reform of the past year.
A tax is what a tax does. We tax tobacco to decrease smoking. Income taxes discourage work. Trump’s tax cuts create incentives to produce more wealth: to work harder, invest in research and development and supply more resources. This builds businesses, creates jobs, lowers consumer prices, grows the economy, and generates prosperity for all. It even raises tax revenue.
What if former Vice President Kamala Harris were president? No Trump, no “big beautiful bill.” His 2017 tax cuts expire. The IRS will try to squeeze $4 trillion more from families and businesses over the next decade. Less foreign investment. Corporations channel funds to tax-sheltered activities. Misallocated resources. Lower profits. Decreased efficiency. Less capital. Fewer jobs. Slowed productivity.
Trump’s economic agenda promises to replicate the Reagan supply-side miracle. Immediate expensing for equipment and U.S.-based R&D reduces upfront costs and improves cash flow for small businesses. It stimulates firms to plan long-term investments and secures the global competitiveness of our companies.
Critics question the size and distribution of such benefits. Investment gains may be more modest than claimed. The largest advantages accrue to corporations and higher-income households. This raises concerns about inequality, even if overall tax burdens decline. However, roughly 45% of the income taxes are currently paid by the top 1%. The bottom 50% pay just 3%. Is that really fair?
What about the fiscal impact? If the tax cuts do not stimulate enough additional growth, the national debt will keep growing. This will eventually force difficult public policy trade-offs between reduced spending on popular programs and more rapid inflation. Ultimately, the debate reflects competing priorities: growth and competitiveness versus equity and fiscal sustainability.
The most controversial part of Trump’s recent reforms: tariffs
Trump uses tariffs to protect our companies and reshape global relationships. The goals? To strengthen American manufacturing by making imported substitutes more expensive. We buy more U.S. products, more jobs for our middle class, less reliance on foreign supply chains. Cooling the CCP hegemony ambitions, however, reduces the benefits of Trump’s tax cuts.
Threats of tariffs provide leverage in international negotiations, giving the U.S. greater influence all over the world – from squashing drug cartels to removing trade barriers against American products. Tariffs have already generated billions of dollars in revenue, helping to offset the short-term budget deficits from the tax cuts. However, because they are not legislated, their future is uncertain.
Tariffs are a regressive tax on imports. The costs ($1,000 per household) are largely passed on to lower- and middle-income households. This complicates Trump’s efforts to combat the inflation inherited from the previous administration. Nine out of 10 manufacturers use imported goods. Higher production costs reduce their competitiveness. It leads to lower profits and job losses.
Retaliatory counter-tariffs harm American farmers and other industries that depend on exports. Trump’s constant changes to the tariff rates, combined with legal challenges, create regime uncertainty, discouraging business investment and slowing economic growth. As a policy tool, they are riddled with difficult trade-offs between protection, efficiency, and consumer welfare.
The most promising, but least successful thus far, part of Trump’s reforms is his war on bureaucracy. Elon Musk’s DOGE launched with a target to slash $1 trillion of waste. The swamp’s lawyers brought those efforts to a halt.
America suffers from over-regulation. Even Obama, the most leftist President since FDR, acknowledged the fact. Massive deregulation can stimulate economic growth and entrepreneurship. Lower compliance costs are particularly beneficial for small firms and startups. Removing barriers encourages business formation, increases competition, and fosters innovation.
Critics counter with an argument that bureaucrats protect consumers, workers, and the environment, and help maintain trust and stability in markets. Weakening oversight can result in unsafe working conditions, lower product standards, more pollution, and financial instability. Some blame the Great Depression and the 2008 financial meltdown on insufficient regulation.
Regulations are a $2.1 trillion annual regressive tax on producers, but without the revenue. A ten percent increase in red tape kills 8% of small businesses, while corporations easily absorb the compliance costs and keep growing. Fewer restrictions allow companies to invest more efficiently, boosting productivity, growing the economy, and increasing tax revenue.
So far, Trump has eliminated 129 old regulations for each new one introduced. The ratio is fantastic, but the numbers are too small to make a difference. Since 1980, bureaucratic restrictions have more than doubled. If the president keeps his legislative majorities in the fall and keeps his promise to “drain the swamp,” such reforms can boost economic growth by 0.8%.
Drill, baby, drill!
When the United States backed Israel in the Yom Kippur War of 1973, the OPEC cartel imposed an embargo on oil exports to our country. At that time, America was heavily reliant on imports. When Reagan won the presidency 7 years later, he unleashed an energy boom. Under Trump, we finally became the No. 1 oil producer in the world, generating more energy than we consume.
The pursuit of “energy dominance” ― expanding domestic oil, gas, and nuclear production while reducing regulatory barriers ― has made America completely self-sufficient. This lowers fuel and electricity costs for us. The strategic importance of this accomplishment is evident now when traffic through the Hormuz Straits has been choked off by Iranian mines, drones, and missiles.
Critics note that more fossil fuel production raises additional environmental and climate concerns. This could mean long-term economic costs linked to pollution and extreme weather. Prioritizing oil and gas may also crowd out investment in renewable energy. However, we are in the early stages of the AI revolution. That won’t be fueled by the wind, the sun, or the moon.
Trump’s midterm grade
In a recent interview, Trump gave himself an A-plus on the economy. Then he corrected himself – “A-plus-plus-plus…” His midterm grade looks more like a solid B. Trump’s tax reform indeed passed despite the very slim GOP majority in Congress. That was an amazing success for the President, and the country will reap the benefits for many years to come. His energy policies give America a huge advantage in the global race against China. Future administrations will freeride on this boom.
If Trump’s supporters retain control of the legislative branch until 2029, they could collaborate with SCOTUS in eliminating much of the bureaucratic mess accumulated over the past several decades. And if, instead of relying on tariffs as a source of revenue, the President abolishes the IRS by adopting the FairTax proposal, he will earn his A-plus. We wish him well. If Trump’s economy thrives, we all win.
Dr. Alex Tokarev is an associate professor of economics at Northwood University. Kristin Tokarev is a writer and producer for Stossel TV. This piece includes research from Northwood University students Jakobie Bartholomew, Gavin Powell, and Savannah Teenier.