Trump's tariffs have done 'significant damage' to the U.S. economy, says Moody's chief economist

Key Points:

• Job growth has stalled since the imposition of tariffs, with only the non-traded healthcare sector showing meaningful payroll increases, while inflation has risen to 3% year-over-year, surpassing the Federal Reserve’s 2% target.
• Economists like Aditya Bhave argue that supply shocks from tariffs are inflationary by shifting the aggregate supply curve upward, leading to reduced real consumer spending and increased inflation, contradicting Treasury Secretary Scott Bessent’s view that tariffs cause only temporary price changes.
• The U.S. Department of Homeland Security collected $287 billion in customs duties in 2025, a 192% increase from the previous year, providing significant revenue that could help fund large fiscal packages without increasing national debt.
• The Supreme Court ruled tariffs imposed under the International Emergency Economic Powers Act unconstitutional, leading to legal challenges and potential redistribution of collected revenues to businesses, with uncertainty about if or when taxpayers might recover these funds.
• A new supply shock from rising oil prices due to the U.S. and Israel’s conflict with Iran threatens to further damage economic growth and push inflation higher, testing the resilience of the U.S. economy.