Donald Trump's actions have mostly negative impact on US economy — Morgan Stanley

As noted by Morgan Stanley economists, Donald Trump's new US budget bill could be the stimulus that helps restore the country's economic exceptionalism. However, the approaching deadline for the introduction of increased import tariffs on August 1 and the tightening of immigration policy threaten to negate much of the favorable effect of the new fiscal boost for the US economy.

According to Morgan Stanley economists, the fiscal bill is expected to improve growth prospects for the US economy in the short term. However, they add that the cumulative effect of all the Donald Trump administration's actions will result in a “slow-growth, firm-inflation economy.”

Aside from the damage from potential reciprocal tariffs from many US trading partners, economists also don't expect the new budget legislation to have a noticeably favorable effect. They estimate that it could add only about 0.2 percentage points to US GDP growth in 2026.