Before Donald Trump declared “liberation day” on 2 April 2025 and shocked the world by raising import tariffs on nearly every country the US did business with, he had spent almost three months causing chaos in Washington.

The wholesale slashing of government jobs under Doge (the “department of government efficiency”) and the defunding of US aid agencies had shown White House watchers that the US president was in a hurry to upset institutions he considered profligate or useless.

Investors quickly understood that chaos was an essential tool in Trump’s armoury. Almost as soon as he was inaugurated, there was a steady decline in the value of the dollar against other currencies. Investors sold assets denominated in dollars and bought assets elsewhere: Europe, Asia, South America.

“If you think that discouraging investors from buying assets in the US is a victory, then you don’t believe in a growing economy,” said Dario Perkins, the head of global research at the consultancy TS Lombard. “If it was possible for Trump to have spent the last 14 months on the golf course, we would be in a better place.”

Russ Mould, the investment director of the British stockbroker AJ Bell, said: “America is still home to the world’s largest economy and its reserve currency, as well as the globe’s largest equity and bond markets, but investors continue to reassess their exposure one year on from liberation day.”

The economy has either gone sideways or declined, depending on the preferred measure. Data from the Bureau of Labor Statistics shows that US companies, which were supposed to be the victors in Trump’s new tariff war, stopped hiring almost as soon as liberation day was announced.

Significant revisions in February to data covering 2025 pushed payroll employment down by 403,000 jobs, resulting in the addition of 181,000 jobs last year. This small boost is set against the 163 million people who are employed in the US.

Figures from the Conference Board, a US thinktank, show consumer confidence sliding after Trump took office. A brief recovery appears to coincide with a huge climbdown on 12 May – the day the US and China agreed to defuse their post-liberation day tariff escalation.

The next few months of steadily increasing confidence levels followed probably the calmest period in the second Trump presidency. But sentiment began to fall again in the autumn as the White House battled with Congress over the federal budget deficit and much of the public sector was shut down.

A poll by the University of Michigan showed consumer confidence at a near record low at the end of 2025. A six-month moving average produced by the Conference Board showed every generation, from baby boomers to gen Xers, had lost confidence in the economy over the past year.

Trump’s liberation day executive order stated: “The decline of US manufacturing capacity threatens the US economy in other ways, including through the loss of manufacturing jobs.”

Free market conservatives who railed against Trump’s protectionism were quick to tell the president how his tariff plan was never the answer. Between January 2025 and March 2026, the US manufacturing sector shed 100,000 jobs. Worse, the ratio of manufacturing workers to total nonfarm employment fell to the lowest point since 1939, when the Bureau of Labor Statistics started tracking this data. Last month, the Bureau of Economic Analysis reported that the US deficit in goods had expanded to an all-time high in 2025.

As an illustration of the White House’s failure to boost exports and cut imports, critics said it was stark. Bryan Riley, the director of the National Taxpayers Union Foundation’s free trade initiative, said: “One year after liberation day, the evidence is in. Tariffs failed even by the Trump administration’s own terms. They did not shrink the trade deficit, did not revitalise manufacturing and did not help farmers. It would be a mistake to replace one set of failed tariffs with another.”

Trump, like Vladimir Putin, is seen by his critics as hollowing out the economy to pay for a populist agenda littered with pet projects. As Russia and the US appear trapped by a politics that leads to long-term economic decline, investors have sought other avenues.

Mould questioned whether the US would ever again be considered a capitalist haven with robust courts and presidents who sought to protect private assets. “Tariffs and strong-arm trade tactics, challenges to the independence of the US Federal Reserve and now military incursions in Latin America and the Middle East, as well as sabre-rattling over Greenland, are combining with lofty American stock market valuations and a soaring federal deficit and prompting investors to reassess the narrative of American exceptionalism,” he said.

Some major US companies have redirected their investments to Europe, but China has proved to be one of the main beneficiaries. In the year to February 2026, China’s industrial profits increased by 15.2%. It’s a boom that Beijing will struggle to repeat should Chinese companies face fuel and energy shortages and price hikes. But the decline of two major powers can only be to China’s gain.