Trump’s Growth Bet: Can AI, Tariffs and Tax Cuts Deliver a Lasting Economic Boom?

President Donald Trump has spent 20 months promising that the United States was on the cusp of an economic boom, but a stronger-than-expected August jobs report has again highlighted the challenges facing his economic agenda.

The US economy added 162,000 jobs in August, providing a positive signal after months of sluggish hiring. However, Trump responded by focusing on inflation, interest rates, financial markets and trade rather than celebrating the employment gains.

Trump has argued that lower interest rates would allow the US economy to expand more rapidly. He said Friday that gross domestic product could grow at rates as high as 12 to 15 per cent if borrowing costs were reduced. The president has also blamed high interest rates on the cost of servicing the US government debt.

The US economy has so far grown at roughly 2 per cent annually, slower than the gains recorded during the Biden administration. At the same time, inflation and elevated borrowing costs have remained concerns for the administration.

Trump’s economic team has pointed to artificial intelligence, tariffs and tax cuts as key elements of its growth strategy. White House officials argue that AI could increase productivity, while tariffs could encourage more manufacturing in the United States. They also say tax cuts could support business investment.

Christopher Phelan, chairman of the White House Council of Economic Advisers, said he expected higher growth and noted that recent job gains had been about twice the level needed to match population growth.

However, economists have cautioned that stronger growth alone may not resolve the country’s fiscal challenges. Ernie Tedeschi of Stripe said sustained growth above 3 per cent for a decade would be needed just to stabilise the government’s already high debt burden.

The national debt has crossed USD 40 trillion, while the yield on the 10-year US Treasury note reached 4.79 per cent on Friday.

Trump’s approval rating on the economy stood at 32 per cent in mid-summer, according to AP-NORC polling, compared with 50 per cent among voters in 2018.