About a year has passed since President Donald Trump returned to the White House. The second Trump administration, launched on Jan. 20, 2025, has completely upended the course of U.S. domestic and foreign policy. ChosunBiz examined in sequence the U.S.-China trade war that erupted with the start of Trump's second term, on-the-ground U.S. economic policy, and interviews with experts in the United States and China, and analyzed in detail the future envisioned by Trump's second term. [Editor's note]
The year 2025, when U.S. President Donald Trump returned to the White House, is expected to be recorded as a year when sweeping changes surged across American society. From the first day in office, the second Trump administration rolled out bold executive orders and unconventional appointments. The reemergent slogan "Make America Great Again (MAGA)" rattled economic indicators and the social structure at the foundation. Approaching its first anniversary, the second Trump administration holds a dazzling macroeconomic report card from last year. But behind it remain heavy challenges of job insecurity and severe social conflict.
◇ 4.3% high growth led by AI investment and tax cut
On the surface, the 2025 U.S. economy was close to "Goldilocks" (an ideal state that is neither too hot nor too cold). According to the U.S. Bureau of Economic Analysis (BEA), the United States recorded real gross domestic product (GDP) growth of 4.3% in the third quarter of last year. It drew a steep upward curve following 3.8% growth in the second quarter.
The prevailing view is that this high growth was thanks to the ambitiously pushed "One Big Beautiful Bill." Centered on large-scale corporate tax cuts and deregulation, the bill spurred corporate investment sentiment. In particular, big tech companies such as Microsoft, Amazon, and Google poured hundreds of billions of dollars into building artificial intelligence (AI) infrastructure, driving economic growth. Investment in semiconductors and software, led by Nvidia, became a key engine for increasing fixed assets across the United States.
Capital markets also ran hot. At year-end, the main New York stock indexes hit a record high day after day. President Trump touted this as his achievement and declared the "return of American capital." But unlike the cheers in financial markets, the mood on the real-economy front was quite different. As of late last year, the dollar index (DXY), which shows the value of the dollar compared with the currencies of major trading partners, moved around 98 at year-end. The dollar index typically uses 100 as a baseline, with higher levels indicating a stronger dollar and lower levels a weaker dollar. The weaker year-end dollar helped ease inflationary pressures by reducing the burden of import prices in the United States.
Still, despite somewhat eased exchange-rate conditions, the pressure felt on U.S. manufacturing floors did not abate much. Under the Trump administration's "manufacturing reshoring" stance, many corporations expanded investment in the United States and pushed to restart plants. On these sites, real-economy factors such as interest rates and slowing demand shook operations more directly than the weaker dollar. In particular, with the policy rate (federal funds rate target range) held at 3.50%–3.75%, U.S. corporations felt a significant borrowing expense burden. For corporations with a high export share, there were many cases in which they faced pressure to defend market share by accepting price cuts or reduced margins.
The inflation rate showed stability, falling to around 2.7% as of November. Still, the cost of living felt by ordinary people remained high. Because of the impact of high tariffs introduced by the Trump administration, prices of daily necessities such as coffee, meat, and processed foods hardly fell. Citing experts, the Los Angeles Times said, "Macro indicators point to a record high, but the real purchasing power of middle- and lower-income households is instead constrained by the tariff bomb and a strong exchange rate."
◇ Musk's DOGE brings a "wave of layoffs"
The labor market stands in starkest contrast to the growth indicators. As of November 2025, the U.S. unemployment rate rose to 4.6%. That is the highest level since September 2021. Outside the health care industry, job growth across the private sector all but stalled.
What stoked this was the Department of Government Efficiency (DOGE) led by Elon Musk. President Trump tapped Musk as the spearhead of administrative reform and overhauled the U.S. federal government structure. According to an analysis by the Cato Institute, during roughly the 10 months after the start of Trump's second term, federal government employment fell by about 271,000 (about 9%). The figure includes not only layoffs but also early retirements and voluntary departures. In particular, a large share of the decline was concentrated in October, raising concerns about administrative gaps.
Musk said he would transplant corporate management methods into government to stop waste and boost efficiency. But the Cato Institute assessed that even after DOGE's launch, federal expenditure from January to November 2025 reached about $7.6 trillion, showing no clear structural spending-cut effect. Instead, the large-scale workforce reduction led to disruptions in administrative services. Passport issuance times more than tripled from normal. Complaints over delays in Social Security Administration (SSA) processing were raised across the country.
Ultimately, the federal government faced a shutdown for 43 days from Oct. 1 to Nov. 12 last year. It went down as the longest shutdown in U.S. history. It was the result of a combination of political strife that flared during budget negotiations and the radical cuts pushed by DOGE. The Washington Post (WP) criticized it, saying, "While cabinet members appointed by President Trump destroyed the civil service system and enjoyed Gatsby-like lavish parties, the civil service was plunged into fear and paralysis."
◇ Border lockdown and 2.5 million deported… a divided American society
In social policy, President Trump pushed campaign pledges at a blistering pace. He stuck to a hard-line course under the banner of "law and order." According to the Department of Homeland Security (DHS), in 2025 the number of undocumented immigrants forcibly deported by U.S. authorities exceeded 605,000. Adding 1.9 million who chose voluntary departure, a total of about 2.5 million immigrants left U.S. soil.
President Trump framed this as "repelling an invasion" and a "war on narco-terrorism," and declared a national emergency. He reinforced troops and resumed wall construction in the Mexico border region, a main corridor for undocumented crossings. These moves formed a base of strong support among voters in the Rust Belt, the once-thriving Midwestern industrial region that anchors the Trump administration's core base.
By contrast, he clashed head-on with areas that styled themselves as so-called "sanctuary cities," such as California and New York. When federal agents raided neighborhoods and workplaces to round up immigrants, fierce protests erupted across downtowns. The California state government refused to carry out federal immigration policies and launched massive litigation. Social conflict spread uncontrollably, and American society split completely into "pro-Trump" and "anti-Trump."
Economists worried that large-scale deportations could deepen labor shortages over the long term and shave potential growth. The Peterson Institute for International Economics (PIIE) analyzed that, due to immigration restrictions, this year's U.S. GDP growth could be 0.5 to 0.7 percentage points lower than previous projections.
◇ "2026 will be the real test for Trump's second term"
Views of President Trump, as he closes out his first year back in power, are sharply divided. Supporters were thrilled by achievements in economic growth and border reinforcement. The opposing camp criticized damage to democratic values and social turmoil. Job-approval ratings for President Trump, compiled by major polling institute Gallup and others, remain at 36% to 39%. That is down 8 to 10 percentage points from the early days of his term. In an Emerson College Polling survey, negative ratings (50%) far outpaced positive ratings (41%).
Experts defined the first year of Trump's second term as a period of "restructuring through destruction." The achievements are clear, they said, but the social expense incurred in the process is considerable. This year, observers say, the key will be how well the administration manages the side effects that emerged last year.
Jeffrey Frankel, a Harvard University professor, said in an interview with the Guardian, "The real results of the aggressive tariff policy and tax cut carried out in 2025 will begin to appear in 2026," adding, "If inflationary pressures reemerge and a contraction in the labor market persists, there is a high risk of falling into the swamp of stagflation."
Mark Zandi, chief economist at Moody's Analytics, said, "It is positive that the government created conditions for corporate investment, but social polarization and instability in the administrative system are factors that block long-term investment by economic actors," adding, "If the Trump administration is to win the 2026 midterms, it must roll out policies that improve people's actual quality of life, not macro indicators."