Donald Trump’s second presidential term recently completed its first year on January 20, 2026, marking a period of profound global economic transformation driven by intense policy shifts and commercial embattlements. From an immediate announcement of tariffs targeting China, Mexico, and Canada in February 2025—less than a month after his inauguration—the administration’s actions quickly redefined international trade dynamics. This initial phase initiated a significant trade war, particularly impacting relations with Beijing, which gradually moved towards complex negotiations.
The administration’s aggressive approach continued with a broader application of tariffs in April 2025, during an event dubbed “Liberation Day,” encompassing nations like Brazil and members of the European Union. Concurrently, July saw the U.S. Senate pass the “One Big, Beautiful Bill,” a priority legislative package focused on substantial tax cuts and increased government spending, aiming to stimulate domestic economic activity.
Danilo Igliori, Chief Economist at Nomad, offered a comprehensive analysis of this tumultuous period, highlighting a unique paradox where perceived market uncertainty contrasted sharply with surprisingly resilient economic indicators within the U.S. economy.
Trade policies ignite global disputes and market unease
The early imposition of tariffs against key trading partners set a confrontational tone for Trump’s second term, triggering immediate reactions across global supply chains. These protectionist measures, particularly the escalating trade war with China, created significant volatility and reshaped international commercial agreements as nations sought to mitigate impact.
The subsequent expansion of these tariffs in April 2025, during the so-called “Liberation Day,” to include economies like Brazil and the European Union, solidified the administration’s “America First” strategy. This broad application of duties underscored a commitment to reshaping trade balances, regardless of potential diplomatic or economic fallout with traditional allies.
Economic indicators show surprising resilience
Despite the aggressive trade actions and market anxieties, Igliori noted the prevalent sense of “uncertainty” in financial circles, directly linked to the impactful economic policies, especially the widespread application of tariffs.
Paradoxically, the actual U.S. economic data presented a different narrative, showing that inflation, while not reaching its target, also did not experience an undesirable surge or “rebound.”
The unemployment rate, though it experienced a slight increase, remarkably maintained a very low level, indicating continued strength in the labor market even amidst policy shifts.
Further positive signs emerged as interest rates began a downward trend, and the Gross Domestic Product (GDP) was strongly projected to achieve growth exceeding 2%, pointing towards underlying economic stability.
Institutional clashes challenge federal reserve’s autonomy
A deeply concerning aspect of the first year involved direct clashes between President Trump and established U.S. institutions, particularly the Federal Reserve, raising serious questions about its independence. In July 2025, Trump publicly threatened to dismiss Chair Jeremy Powell after months of critical remarks, escalating tensions between the White House and the central bank. This friction culminated in August 2025 with the dismissal of Lisa Cook, a member of the Fed’s Board of Governors, an action that immediately sparked a legal challenge concerning the fundamental autonomy of the nation’s monetary authority. The dispute underscored a potential erosion of checks and balances within the U.S. economic framework, impacting global financial trust.
Government shutdown and geopolitical interventions
Beyond institutional disputes, the government experienced its longest shutdown in U.S. history, spanning from October to November 2025. This prolonged halt in federal operations led to widespread disruption and resulted in significant mass layoffs across the public service sector, impacting thousands of government employees and their families.
On the international front, January 2026 saw the United States launch a targeted attack on Venezuela, leading to the capture of its leader, Nicolás Maduro, who currently remains imprisoned on American territory, marking a bold and controversial move in foreign policy.
Dollar depreciation reflects shifting global confidence
One of the most significant and noticeable economic ramifications of Trump’s policies has been a sustained global depreciation of the U.S. dollar, indicating a strategic re-evaluation by international investors. Igliori explained this phenomenon as being intrinsically linked to the perceived institutional uncertainty in the U.S. and the manner in which the country has utilized its hegemonic position in global affairs. This shift prompted numerous entities to withdraw resources from American markets, opting instead for greater geographical diversification of their investments.
This dynamic, characterized by a downward trend for the dollar, is highly likely to persist throughout 2026, further influencing global currency markets and international trade balances as investors continue to adjust their portfolios.
The critical juncture for federal reserve leadership
The question of the Federal Reserve’s autonomy remains a paramount concern for the immediate future, especially given that Jeremy Powell’s term as Chair is scheduled to conclude in May 2026, setting the stage for a critical leadership transition. The selection of his successor carries immense weight for financial markets worldwide, as it will determine the direction of U.S. monetary policy in an already volatile global environment.
Igliori warns that the central question revolves around who will replace Powell and, critically, whether this individual will demonstrate a willingness to represent the White House’s agenda within the independent framework of the Central Bank, potentially compromising its crucial institutional integrity.
