A gathering of prominent US economic experts at the Brookings Institution has delivered a sobering assessment of America’s current trade and fiscal policies, warning that recent measures will inevitably yield long-term economic disruption despite demonstrating surprising short-term resilience.
The panel discussion, titled “One Year of ‘America First’ Trade Policy: What Did We Learn, and What Comes Next?”, examined the paradoxical performance of an economy that continues expanding slowly despite implementing policies that mainstream economists would traditionally predict would trigger stagnation or collapse.
Ben Harris, Vice-President and Director of Economic Studies at Brookings, identified four unprecedented policy shocks implemented throughout the past year: tariff rates skyrocketing from 2.4% to 28% on average; net immigration plunging to near zero or negative levels; trillions in new debt accumulated outside recession or wartime conditions; and erosion of Federal Reserve independence through White House pressure and investigations.
Harris proposed several theories explaining the economy’s unexpected endurance, including possible overstatement of shock impacts due to evasion and muted retaliation, offsetting stimuli from emerging technologies like AI investment, potential flaws in traditional economic models regarding short-term predictions, and the simple reality that full effects require time to materialize.
Former White House official Nora Todd detailed how corporations have implemented sophisticated mitigation strategies, including absorbing tariff costs rather than passing them to consumers, stockpiling goods preemptively, and restructuring production chains to avoid tariffs entirely.
Wendy Edelberg, Senior Fellow in Economic Studies, presented data showing tariffs have already elevated consumer prices by approximately half a percentage point, with further inflation anticipated. She emphasized that both imported goods and competing domestic products have become more expensive, disproportionately burdening low-income households and small businesses while ironically reducing manufacturing employment due to increased costs of imported inputs.
Daniel H. Rosen, cofounder of Rhodium Group, highlighted the geopolitical consequences of current policies, noting that US allies are increasingly seeking alternative markets and strengthening economic ties with China. He advocated for a more nuanced trade approach that distinguishes between genuinely sensitive security concerns and the vast majority of economic exchange that presents no security threat.
The consensus among experts indicates that while immediate catastrophic collapse has been avoided, the accumulated policies are creating structural vulnerabilities that will manifest as persistent inflation, supply chain fragmentation, eroded geopolitical trust, and ultimately significant economic disruption in the longer term.