President Trump is confronting the same inflation reality that troubled his predecessor: while headline inflation has fallen to roughly 3% from a >9% peak, many tariff‑exposed goods remain elevated—beef ~15%, bananas +7%, coffee >20%—and he has only selectively rolled back tariffs on hundreds of food items even as he touts about $150bn in tariff revenue and promised corporate investment. Weak consumer sentiment and a 38% approval rating raise political risk ahead of 2026 midterms, and economists warn that tariff pass‑through (Goldman expects full pass‑through next year), immigration constraints and pressure on the Fed could sustain price pressures; meanwhile reshoring and AI investment pledges are long‑dated, could reduce labor demand, and leave investors reassessing U.S. exposure against IMF growth forecasts of ~2% in 2025–26.
Headline inflation has come down to roughly 3% annually from a peak above 9%, but price levels remain elevated for many tariff-exposed and imported goods: beef is up nearly 15%, bananas +7%, coffee more than 20%, tools and hardware +6.2% year-over-year, and cleaning supplies +5.5%, while a Thanksgiving grocery basket is estimated 5% cheaper than 2024 but still 13% above 2019. Wage gains have been largely offset by these higher prices, contributing to weak consumer sentiment. Political and policy dynamics are intensifying: President Trump has selectively rolled back tariffs on hundreds of food items including coffee and bananas while touting about $150 billion in tariff revenue and promising corporate reshoring and AI investment; his approval rating is 38% and the University of Michigan sentiment gauge hit its second-lowest November reading with independents at a record low. Economists in the article warn tariff pass-through could accelerate next year and that some promised investments are long-dated or may not materialize. From a macro and market perspective, Goldman Sachs expects full tariff pass-through next year, the IMF projects U.S. growth near 2.0%–2.1% in 2025–26 which contrasts with administration hopes for much higher growth, and pressure on the Fed to cut rates is visible but could be counterbalanced by inflationary effects of tariffs and supply constraints. Key risks for investors are renewed inflationary impulses from tariffs, politically driven policy shifts that increase uncertainty for multinational operations, and stretched expectations around reshoring and AI-driven job gains.
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