What are independent economists’ long-term growth forecasts under proposed Trump tax-and-tariff plans versus Biden-style investment policies?
Executive summary
Independent economists and major forecasting shops generally project that growth under a Trump-style mix of tax cuts plus tariffs would deliver modest near-term gains for profits and investment but slower, less dynamic long-run GDP growth than a Biden-style, public-investment-led path—forecasts cluster around roughly 1.5–2.0% annual real GDP growth in the medium term under Trump policies versus somewhat higher potential under investment-focused Biden policies, depending on assumptions about fiscal offsets, tariffs, and productivity [1] [2] [3] [4].
1. What the consensus forecasts say about Trump’s tax-and-tariff approach
A cross-section of independent forecasters and academic analysts say the immediate effects of tax cuts and deregulatory moves can lift business confidence, stock prices and capital spending in the short run — a pattern noted in analyses of earlier Trump-era policy moves [5] — but that tariffs act as a drag: most models project tariffs are stagflationary, raising costs and reducing long-run dynamism and investment, and many economists warn tariffs will slow growth and raise unemployment risks [6] [7] [8]. Several forecasting houses and think tanks that factor in higher tariffs and rising deficits see U.S. growth settling to roughly 1.5–2.0% a year in the coming decade, with Deloitte projecting growth near potential (about 1.8% by 2030) and real GDP around 1.9% in 2026 under scenarios that include higher tariffs and rate pressures [2] [1]. Critics argue the fiscal math is worse: the Peterson Institute projects large sustained primary deficits rising several points of GDP under Trump proposals, which would raise the debt ratio and create headwinds for growth absent offsetting measures [4].
2. How pro-growth advocates counter that picture
Proponents, including some conservative economists and investor-focused firms, emphasize that lower business taxes, deregulation and new investment incentives can produce measurable gains in business investment and productivity, pointing to historical rebounds in investment and confidence after past tax cuts [5] [9]. Firms such as PIMCO and some market analysts concede near-term resilience — much of 2025 showed stronger-than-feared activity driven by private-sector AI investment — and note private investment commitments made in the current policy environment could partially offset tariff-related frictions [1]. Those optimistic views typically rely on assumptions that tariff magnitudes will be limited, that private capex responds strongly to incentives, and that monetary policy will not tighten aggressively in response to any tariff-led price shocks [6] [9].
3. The Biden-style investment forecast and why it matters
Independent analysts tracking Biden’s investment-first agenda point to direct public spending and tax credits that can spur targeted private investment in infrastructure, clean energy, semiconductors and regional manufacturing; forecasters who model those policies typically show slightly higher medium-run GDP on the order of a few tenths of a percentage point above the tariff-heavy alternative, driven by productivity gains from public-private projects and sustained investment flows [10] [1]. The counterargument is political: if Trump-era rollbacks of those programs occur, the private investments they were mobilizing could dry up and subtract from growth, a risk raised explicitly by proponents of Biden policies [10].
4. Biggest sources of forecast divergence — tariffs, deficits, and AI
Where independent economists diverge most is on three inputs: how large and persistent tariffs will be (many models treat tariff effects as one-time price increases but harmful to growth), how tax cuts are financed and their effect on debt dynamics, and how much private AI-driven investment offsets policy-induced uncertainty [6] [4] [11]. Forecasts that assume modest tariffs and strong, sustained corporate capex tend toward benign growth outcomes; forecasts that assume large tariffs, big unfunded tax cuts and rising uncertainty project slower, less dynamic growth and rising debt burdens that depress long-run GDP [6] [4] [11].
5. Bottom line for long-term growth comparisons
Independent economists broadly place “Trump tax-and-tariff” scenarios in a band where short-run gains in investment and markets are possible but medium-to-long-run GDP growth is likely lower and less sustainable (roughly 1.5–2.0% depending on assumptions), whereas “Biden-style” investment policies—if preserved and well-targeted—are forecast to generate modestly higher trend growth through productivity and mobilized private investment, with outcomes sensitive to congressional action and fiscal tradeoffs [2] [3] [4] [1].