New preliminary second quarter GDP numbers are out! The drop in imports from foreign countries into the United States dropped in the second quarter of 2025 by the largest percentage ever recorded. Is this a good thing? Unsurprisingly, depends on who you ask!
The GOP is certainly cheering, even though tariffs are having an inflationary effect on consumer prices, and even though the chaotic “policy” out of the White House is cratering consumer confidence– though this has recovered slightly.
I said when Trump first proposed the tariffs that he could have easily won the support of Democrats by imposing not tariffs but a carbon tax– specifically focusing on shipping. Turns out that a bunch of countries actually proposed this at the same time he was declaring his trade war. Will the United States join in? Not before 2029, certainly. International shipping accounts for a small percentage of global energy demand– but let’s also remember that a few percentage points of global demand is still a huge amount of demand.
There are a few viable avenues for implementing complicated or controversial policy. Trump’s approach has generally been to say something is one thing and then do the exact opposite, as the GOP has done with slashing a trillion dollars for Medicaid and then claiming that zero people will lose coverage. Tariffs are no different, with Karoline Leavitt claiming that “tariffs are actually a tax cut, not a tax hike,” even though that is, well, factually untrue.
So, if you believe the numbers out of Washington, the GDP doesn’t look bad. I don’t really know if I believe them or not, but I am personally pretty heavily invested in cash these days because of the amount of risk in the stock market. Trump counterbalanced the good news by declaring on his social media platform that new tariffs will be applied to India on August 1st, and also declaring that no extensions on the threat of other tariffs would be offered, even though, uh, extensions seemed to have been offered before.
In any case, the market is shrugging at August 1st the same way it’s shrugging at the GDP numbers. Unsurprising given the inconsistency and general stream of lies coming out of the White House these days. Now, if the tariffs end up effectively replacing a carbon tax, though? Can’t say I’m mad about that. But I think they’ll likely accompany much worse domestic policy to counterbalance any potential energy savings or carbon reduction.