标签： North America

Against widespread expert predictions that the U.S. would cede its economic growth lead following the 2025 implementation of sweeping global tariffs and the 2026 outbreak of conflict with Iran, new GDP data confirms the American economy has maintained a substantial performance gap over the European Union. Five-year average annual national income growth hits 3.3% in the U.S., compared to just 2.6% for the EU. Most recently, year-on-year first quarter 2026 GDP growth reached 2.6% in the U.S., while the EU recorded only 0.7% expansion.

Economists have identified a handful of core structural and policy factors that explain this ongoing U.S. economic resilience, starting with far more expansionary fiscal policy. While most European governments run modest budget deficits, the U.S. consistently maintains much wider gaps between government spending and tax revenue. In 2025, the average EU deficit stood at 3.1% of GDP, while the U.S. deficit hit 5.8% of GDP – delivering a far stronger demand stimulus to the economy. By injecting more income into households through public payrolls and into suppliers through government procurement, U.S. fiscal policy has lifted aggregate demand, supported output growth and kept unemployment lower than European levels.

A second, equally critical driver is the U.S.’s far larger investment in innovation and emerging technology. As early as 2021, the EU spent 270 billion euros less than the U.S. on research and development, with most European innovation spending concentrated in long-established legacy sectors such as traditional automaking rather than next-generation technologies. Since 2025, U.S. investment has been heavily focused on artificial intelligence, allowing the country to solidify its dominance over global digital platforms and cutting-edge tech. The widespread adoption of AI across U.S. industries has widened the U.S. lead in labor productivity growth: since 2019, U.S. output per hour in professional services has jumped more than 18%, compared to just 5% across the EU.

These economy-wide productivity gains have translated into modest but consistent growth in U.S. inflation-adjusted real wages, sustaining steady consumer demand while also driving strong corporate profit growth that has pushed U.S. stock markets to repeated record highs. By contrast, average EU real wages have barely expanded over the past two decades, and European corporate profits remain muted.

This U.S. tech leadership does face headwinds, however: the Trump administration’s strict immigration clampdown, which includes restrictions on skilled scientists and international students, has shaved an estimated 0.8 percentage points off annual U.S. GDP growth compared to pre-2025 net immigration trends. Still, the U.S. retains a key structural advantage for tech growth: looser regulatory frameworks for emerging innovation, compared to the EU’s stricter oversight and China’s state-directed innovation model. Even though the EU produces a similar number of early-stage tech startups as the U.S., most European scaleups relocate to the U.S. to access capital and a more permissive business environment as they expand.

A third major advantage for U.S. industry is substantially lower energy costs than in Europe. The U.S. produces far more fossil fuels than the EU and applies lower tax rates to energy, while also rapidly scaling cheap renewable energy capacity despite the current administration’s public skepticism of solar and wind power. While this reliance on fossil fuels creates long-term climate-related economic vulnerability, it has delivered an immediate cost advantage that has supported U.S. manufacturing regeneration and allowed American firms to capture a large share of global demand for data-intensive services such as e-commerce and generative AI.

The final, often-overlooked driver of U.S. economic outperformance is what former French finance minister Valéry Giscard d’Estaing famously called the U.S.’s “exorbitant privilege” as the issuer of the world’s primary reserve currency. Like most large growing economies, the U.S. runs a substantial current account deficit, as it consumes more goods and services than it produces domestically, requiring continuous borrowing from global creditors to cover the gap. For most economies, this persistent deficit would trigger currency devaluation, higher inflation, or a forced period of slower growth to rebalance the country’s international position. But because the U.S. dollar dominates global commodity trade and is seen as a safe haven asset even during global shocks – including conflicts triggered by U.S. foreign policy – global investors consistently move capital into U.S. assets to finance the deficit, keeping borrowing costs low and growth supported.

To date, efforts to challenge the dollar’s dominance have made little headway. The EU’s plans to unify its fragmented financial markets to strengthen the euro’s global role have progressed slowly and were set back significantly by the UK’s 2016 Brexit withdrawal, which stripped the bloc of its largest global financial center. Meanwhile, alternative reserve currency initiatives from China, Russia and major oil-exporting nations have failed to gain widespread traction. Even so, the dollar’s exorbitant privilege carries downsides for the U.S.: strong capital inflows that appreciate the dollar make U.S. exports less competitive globally, and the Federal Reserve must account for global spillovers when adjusting interest rates, complicating domestic inflation control. Paradoxically, however, the large spending power of U.S. consumers and businesses, sustained by this global financing system, often leaves the U.S. acting as a global engine of growth for other regions during periods of slowdown.

Despite the consistent strong economic growth that has defied post-2025 predictions, the performance gap has not translated into political gains for the Trump administration. Just as the steady 2021-2024 expansion failed to boost the political standing of Trump’s predecessor Joe Biden, the continuing growth trend has left Trump with a record-low approval rating of just 36%. This disconnect stems from the uneven nature of U.S. growth: driven by large fiscal deficits and rising corporate profits, the expansion has only delivered marginal wage gains for most American households, who still struggle with persistent high prices and growing affordability pressures for everyday living costs.

Amid shifting U.S. trade policy that has left global business leaders without the policy clarity they need to map long-term investments and supply chain strategies, top trade and logistics experts are warning that persistent uncertainty will reshape cross-border commerce for years to come. Douglas Irwin, a Dartmouth College economics professor, outlined the risks to business planning during a Wednesday media briefing hosted alongside Gene Seroka, Executive Director of the Port of Los Angeles, where the pair discussed evolving tariffs, shifting global trade dynamics, and ongoing U.S.-China trade relations.

When asked about the trajectory of ongoing U.S.-China dialogue and potential tariff adjustments, Irwin emphasized that policy predictability is non-negotiable for companies making medium- and long-term capital commitments. “Businesses absolutely need that predictability of the business environment to make medium-term and long-term investments,” he told reporters.

The current state of uncertainty traces back to 2025, when the second Trump administration imposed sweeping new tariffs on Chinese goods that sent U.S.-China trade tensions soaring. While both sides have since taken incremental steps to de-escalate friction and keep diplomatic channels open, doubts about the future of trade policy have yet to fade. Irwin characterized the current bilateral trade relationship as relatively stable but deeply fragile, describing it as “an uneasy truce” with no guarantee it will hold in the long term.

Companies have no clear visibility into whether Washington will keep existing tariff levels in place or ramp up pressure on Beijing after it concludes ongoing trade reviews, including the upcoming update to the United States-Mexico-Canada Agreement (USMCA). This ambiguity is already driving decisions to shift sourcing away from China, Irwin explained, with many businesses relocating supply chains to Vietnam and other Southeast Asian economies, or expanding nearshoring to Mexico to reduce exposure to policy risk. With no end to uncertainty in sight, companies have little option but to diversify their supply base and build hedges against future policy shifts, he added.

Irwin noted that former and current President Trump has remained the central architect of U.S. trade policy across both of his administrations, consistently framing tariffs as a key tool to advance broader economic and political priorities. “For the next two years, at least, we still have to keep our eye on what the president believes about trade and how he might act,” Irwin said.

New proposed trade measures are adding another layer of uncertainty for global importers. The Office of the U.S. Trade Representative has floated new Section 301 tariffs tied to other nations’ enforcement of forced labor goods bans, with proposed rates ranging from 10% to 12.5%. As of the briefing, the measures were still under formal review. Irwin also advised importers to closely watch what policy will replace temporary Section 122 tariffs when they expire, explaining that the Trump administration is seeking to replace parts of the temporary tariff regime with new Section 301 measures. This framework would preserve most of the current tariff structure while leaving companies guessing about which countries and product categories will ultimately face new duties. “This is sort of the environment we’re going to be in for the next two years: uncertainty about USMCA, uncertainty about the China relationship, and then uncertainty with these Section 301 tariffs,” Irwin added.

Shifts to rules for low-value shipments have created new burdens for small and medium-sized importers as well. The U.S. has recently suspended duty-free de minimis treatment for most packages valued at $800 or less, while implementing new complex customs processing requirements. Irwin explained that the changes will ramp up compliance and administrative costs for small importers that have long relied on simplified customs procedures for small, low-value mail-order shipments.

Seroka echoed that observation, noting that the impacts stretch beyond individual online consumers to small, family-owned businesses that depend on small-batch imports. He recalled meeting with independent retailers along Los Angeles’ Melrose Avenue and in West Hollywood that built their business models around regular small shipments, only to face sudden, unaffordable tax hikes that threaten their operations. “Then suddenly they were hit with tax hikes that were almost insurmountable based on the size of their business,” Seroka said. “It’s going to be a big deal for us coming up.”

Looking ahead to future U.S. administrations, Irwin predicts that any future White House, whether led by a Republican or Democratic president, will prioritize greater trade policy stability but is unlikely to reverse the shifts of recent years and return to the pre-2025 tariff framework. “I think there will be a settling down after the Trump administration,” he said. “Any new administration, whether it’s Republican or Democrat, will still be concerned about trade policy in a big way, but want more stability.” Even so, Irwin noted that once tariffs are implemented, companies adjust their supply chains and domestic industries build political support for retaining the protection tariffs provide, meaning policy changes that happen quickly are rarely reversed quickly. “That doesn’t mean we go back to where we were in, say, 2015 with respect to trade policy,” he said. “What tends to go up quickly sometimes comes down slowly.”

U.S. trade policy is not the only source of market disruption for cargo moving through the Port of Los Angeles. Seroka added that ongoing conflict in Iran and related disruptions to shipping through the Strait of Hormuz have driven up fuel costs for all modes of cargo transportation, from ocean vessels to overland trains and trucks. The immediate impact has already shown up in higher prices for bunker fuel for ships, as well as elevated diesel and gasoline costs for transportation providers and end consumers.

While there were widespread concerns that disruptions to Middle East-bound cargo would create bottlenecks at major Asian ports, Seroka said recent visits to ports in Shanghai, Singapore and Yokohama confirmed that terminal operators have successfully rerouted and separated affected cargo flows. “Our cargo is flying through the market as best it can without impacts from what’s going on with the war in Iran,” he said. The next expected impact will be new or increased fuel surcharges that shipping lines will pass along to importing and exporting companies, he added. “You’ll see a bump there,” Seroka said. “When prices go down, usually that surcharge remains elevated and it lags for some time before it gets back to a price point that’s a little more reflective of what we see today.” Even if the conflict were to end immediately, damaged energy infrastructure and disrupted global energy supply networks will take months to repair, Seroka noted. Despite these headwinds, he emphasized that trans-Pacific trade volumes remain strong and continue to move efficiently through the port.