Donald Trump’s claim that tariffs have “rescued” the US economy relies on selective data, economic misunderstanding, and a dangerous conflation of trade policy with national security.

At the centre of the President Trump’s most recent social media claim that his tariff policies have “rescued” the US economy follows a familiar formula: take volatile short-term trade data, draw sweeping long-term conclusions, assign causation where none exists, and announce the result as a national-security triumph.

The logic is not merely misleading – it is economically illiterate. What is being presented as economic strategy is political theatre. The most revealing line is the president’s hope that the Supreme Court will be “aware of these historic country-saving achievements” before issuing its decision.

In his most recent social media declaration of success, the president presented fresh economic data seeking to link a narrowing of the US trade deficit, from a monthly peak of US$136 billion ($197 billion) to under US$30 billion in just seven months to his “rescuing” of the US economy. His strongly worded announcement came just days before the Supreme Court is expected to rule on the legal fate of his tariffs.

The thrust of Trump’s statement is that the data reflect a stronger economy and proves that tariffs “work”. In fact, it proves nothing of the sort. Monthly trade figures do not demonstrate lasting structural reform, nor do they signal improved competitiveness and prosperity.

In his resounding speech to the World Economic Forum, the Canadian Prime Minister Mark Carney addressed the emerging world order which “requires honesty about the world as it is, not as we wish it to be”.

This means information on which policy decisions are made must be truthful, not politically manufactured. If information itself becomes a tool of political persuasion rather than empirical diagnosis, then no new world order – however well designed – can function rationally.

The recent claims by President Trump that tariffs have “rescued” the US economy illustrate precisely the danger Carney is warning about – policy being justified through narratives that are politically useful but empirically false.

Trade deficits do not typically shrink because an economy becomes stronger; they shrink when domestic demand weakens, when imports are artificially disrupted, or when uncertainty – the greatest of all barriers to trade – prevails.

The president’s own figures confirm this point. The alleged fall in the deficit was driven largely by a 3.2 per cent decline in imports, not by any surge in exports.

The argument becomes even more incoherent when paired with the president’s simultaneous boast of annualised GDP growth exceeding five per cent. An economy that supposedly “rescues itself” by buying less from the rest of the world is not demonstrating renewed strength. It is signalling hesitation and disruption, much of it fuelled by uncertainty created by legally questionable tariffs.

Economists have understood for generations that the overall trade balance is not a policy lever that presidents – or anyone else – can pull at will. It is a macroeconomic outcome shaped by savings and investment behaviour, fiscal policy, and capital flows. Tariffs can change who America trades with, and which sectors bear the costs, but they cannot determine the aggregate trade deficit.

The strongest defence of tariffs is not that they magically “fix” trade deficits, but that when used in accordance with mutually agreed rules they can counter practices such as predatory dumping or state subsidies. They can buy time for domestic adjustment in sectors subject to unexpected surges of imports.

In this view, tariffs are not instruments of macroeconomic fine-tuning, but instruments to be used narrowly (and temporarily), and with congressional oversight as a second-best but sometimes necessary response to a fractured global trading system.

Yet, this is precisely where the president’s argument collapses. Periods of rapid economic growth normally widen the trade deficit, as households and firms import more consumer goods, intermediate inputs and capital equipment.

To claim simultaneously that the economy is booming and that imports are collapsing is to contradict the most basic principles of national income accounting. Both cannot be true for long – and when they appear to be true briefly, the explanation lies in temporary distortions, not durable policy success.

More troubling still is the attempt to recast these short-term trade movements as a national-security victory. National security, properly understood, concerns resilience in genuinely critical sectors, not month-to-month fluctuations in trade statistics. Stretching the concept to cover any trade outcome a president dislikes is precisely what has alarmed US allies, unsettled global markets, and brought the matter before the courts.

This brings us to the most revealing line in the president’s recent statement: his hope that the Supreme Court – poised to announce its final ruling on the legality of the Trump tariffs in the coming days – will be “aware of these historic country-saving achievements” before issuing its decision. This betrays a fundamental misunderstanding of the role of courts. Courts do not rule on whether a policy “worked”; they rule on whether it was lawful.

The legislation at issue for the Supreme Court ruling is the International Emergency Economic Powers Act (IEEPA) of 1977. The act was designed to allow a president to restrict or freeze financial transactions and foreign assets in situations of genuine emergency – war, state-sponsored violence, terrorism and comparable threats. Its logic is firmly rooted in national security and foreign policy.

It was never intended to serve as a general tariff instrument. Yet in recent years, IEEPA has been repurposed not to freeze assets but to levy import duties, effectively bypassing Congress – the branch of government that the Constitution explicitly empowers to “lay and collect duties”.

The US Constitution assigns the power to tax (apply tariffs) and regulate foreign commerce to Congress, not the president. Whatever one thinks of tariffs as economic tools, their use must respect the limits imposed by legislation. No amount of rhetorical success – real or imagined – can retroactively legitimise executive overreach. If it could, constitutional constraints would be meaningless.

US history offers a sobering reminder. The Smoot-Hawley tariffs of 1930 were also defended as protecting American jobs and restoring balance. They achieved neither. Instead, they triggered retaliation, deepened global economic fragmentation, and helped entrench the conditions that destabilised the international order leading to World War II. The post-war trading system was built precisely to prevent such unilateralism dressed up as patriotism.

The deeper problem with the president’s argument is not merely that it is wrong on the numbers – though it is – but that it perpetuates a dangerous misunderstanding of how the global economy works. Trade balances are not scoreboards. And tariffs are not instruments of macroeconomic fine-tuning.

In the light of the forthcoming US midterm elections, the timing and framing of Trump’s claim that “tariffs work” and have “rescued” the US economy suggests nothing more than an electoral initiative designed to mobilise support and neutralise criticism of a controversial policy ahead of the elections.

As the Supreme Court is indeed confronting one of the most consequential trade-related cases in its history, it must not be swayed by monthly trade data that come and go. It is considering a far more fundamental question: can the US president impose tariffs without congressional approval by invoking a national emergency?

The answer will matter not only for the United States, but also for countries such as Australia that crucially depend on a stable, predictable and   rules-based trading environment.

Republished from the Australian Financial Review on 27 January 2026