Top Financial Group Warns Trump’s Tariffs Have Done ‘Significant Damage’ to US Economy
By Brendan Rascius, The Independent, New York — 6 May 2026
Over a year has passed since former President Donald Trump introduced his sweeping tariff regime, dubbed “Liberation Day,” which imposed steep duties on most foreign imports and fundamentally altered U.S. trade policy. Now, the economic data gathered since that pivotal moment paints a troubling picture for the American economy, according to a leading financial authority.
Mark Zandi, chief economist at Moody’s Analytics — a prominent sector of the global risk assessment group — issued a stark warning on Monday. “We have a year’s worth of economic data since Liberation Day,” Zandi wrote. “The data are definitive; the tariffs have done significant damage to the economy.”
Employment Growth Stalls Amid Tariffs
Zandi pointed to key economic indicators, including inflation and employment growth, both of which have been further exacerbated by the ongoing conflict between the U.S. and Iran.
On the employment front, job growth has effectively stalled. The only sector showing meaningful payroll additions last year was the non-traded healthcare industry, which added 693,000 domestic jobs. Excluding healthcare, the labor market saw a net decline, with an average of just 9,700 jobs added per month during 2025. This represents the weakest hiring activity since 2002, barring recession years, signaling significant economic challenges.
Rising Inflation and Rising Energy Prices
Inflation, meanwhile, has accelerated. The consumer expenditure deflator, a sweeping measure of inflation, increased at a 3% year-over-year pace — up from 2.5% before the introduction of the tariffs, and notably above the Federal Reserve’s 2% target.
Zandi underscored that inflationary pressures are also being driven by the war with Iran, pushing oil prices higher and threatening to cause even greater economic damage. “The higher energy and other commodity prices caused by the war threaten to do even more economic damage than the tariffs, further undermining growth and pushing inflation higher,” he observed. “The U.S. economy is resilient, but just how resilient is set to be tested.”
Tariffs Generate Revenue but at a Consumer Cost
Trump’s tariffs, implemented first in April 2025 with a 10% levy on most foreign goods alongside variable country-specific duties, have generated significant government revenue—$195 billion in fiscal year 2025 alone. Treasury Secretary Scott Bessent has highlighted this as a positive step toward reducing the federal deficit.
However, these tariffs have effectively passed their cost onto American consumers. A January report from the Kiel Institute for the World Economy found that U.S. consumers have borne “nearly all” of the tariff costs. Another report by the Tax Foundation in February estimated the levies will increase the average household’s expenses by approximately $1,300 this year.
Public and Political Backlash
The tariffs have been deeply unpopular among Americans, with polls indicating nearly 70% of citizens feel the tariffs have cost them more than any economic benefit. Facing such resistance, the Trump administration has repeatedly paused or revised numerous tariff measures, including on coffee, beef, and other food products.
Critics in media and financial circles have mockingly labeled these retreats “TACO” — Trump Always Chickens Out.
Legal Challenges and the Supreme Court Ruling
The tariff program suffered a major legal setback in February, when the Supreme Court ruled that President Trump had exceeded his authority by applying the International Emergency Economic Powers Act of 1977 to impose tariffs. Trump publicly criticized the ruling as “deeply disappointing,” but vowed to pursue a global 10% tariff under a law limiting such measures to 150 days. Additional components of his trade agenda continue through other policy avenues.
Economic Outlook: Testing Resilience
As the U.S. economy contends with the aftereffects of tariff-induced inflation, stagnant job growth, and the external shock of conflict-driven energy price hikes, uncertainties loom large.
“The U.S. economy is resilient, but just how resilient is set to be tested,” Zandi warned. Policymakers and market observers alike will be closely watching how these combined pressures shape the country’s economic trajectory in the months ahead.
Related Topics: Donald Trump, Trade Tariffs, U.S. Economy, Iran Conflict, Inflation, Employment
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