The Economic Toll of Trump’s Policies Will Soon Be Visible

Many forecasters and investors misinterpret what is happening in the American economy. Some believe the uncertainty around President Donald Trump’s trade and other economic policies is abating, while a loud and influential minority argue that the administration’s deportations and tariffs are not causing the predicted harm. Inflation increased only modestly before coming down in 2025, they point out, while the latest data show the economy growing at its fastest rate in two years.

These mistaken assessments are based on a fundamental misunderstanding of how government-induced uncertainty affects the economy. This confusion makes sense because no presidential administration has ...