On July 31, 2025, Donald Trump signed an executive order reinstating the Presidential Fitness Test in our nation’s public schools. This announcement has triggered wider conversations about the administration’s commitment to improving the health and fitness of our young people. Unfortunately, it comes at a particularly challenging time for the economy, with unpredictable tariffs, a jittery job market and inflation on the rise.
On the very same day that fitness initiative was announced, Trump declared sweeping new tariffs. These tariffs were responsible for most of the day’s U.S. stock market plunge. The tariffs, which cover almost 70 countries, are up to 10%-41%. The new levies will start rolling in on August 7th. They will increase the average effective tariff rate to 18.3%, the highest level since 1934.
Industry analysts are raising the alarm about the ripple effects of these tariffs. Stephen Miran noted that Trump’s domestic spending legislation contributes to uncertainty, stating, “Obviously, they’re not what we want to see.” Mark Zandi added that the tariff policy indicates a “bright red flare that the economy is being hurt.”
The recent tide of tariff increases have companies reeling from higher tax-like costs as well as continued marketplace destabilization from uncertainty. Yet, as disheartened economists have pointed out, these very changes will exacerbate the economic stagnation. Gregory Daco pointed out that there may be a more pronounced slowdown in economic activity during the latter half of the year.
Trump made headlines last week when he removed the Bureau of Labor Statistics (BLS) commissioner. This just on the heels of July’s job report release and alongside all the recent tariff action. Dee interjects to remind Linda that the U.S. economy added just 73,000 jobs in July, well below the 130,000 monthly average so far in 2023. This deceleration in job growth has made even the most cynical economists and policymakers sit up and take notice.
Olu Sonola remarked on the broader implications of these policies, suggesting that Trump’s tariffs have modestly contributed to inflation last month. Analysts are already expecting inflation to go up at least another full percentage point by this time next year. All of this increase is due to the new fineness. “It clearly presents a conundrum for the Federal Reserve going forward,” he stated.
New tariffs and a lackadaisical job market are contributing to growing concerns among analysts. They worry that we might be approaching an economic boogeyman known as stagflation. Moody’s Analytics, EY, and most recently Fitch Ratings have released reports sounding caution against stagnation. They recommend that as growth persists and prices start to rise, inflation could emerge as a more serious risk.
