President Donald Trump’s second term has been full of economic policy changes, such as high tariffs on U.S. trading partners and moves toward big industry deregulation. While some experts feel that these moves can have longer-term positive impacts on the American economy, other experts fear that these moves could backfire on the middle class.
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While not an economic analyst, ChatGPT is good at aggregating and analyzing data, so I asked it what are some of the ways that Trump’s economic policies might backfire on the middle class instead of benefitting them.
Tariff-Driven Price Increases
The most obvious issue directly affecting consumers is that “continued or expanded tariffs on imports (especially from China) may raise the cost of consumer goods, electronics, food, and vehicles,” ChatGPT wrote.
This will impact middle-class households significantly, which tend to spend a larger portion of income on essentials.
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Interest Rate Pressure
If Trump pushes for more borrowing or spending while inflation stays high, the Federal Reserve Board (the Fed) could keep interest rates elevated. While this is good news for high-yield savings and money market accounts, ChatGPT warned, “This would make mortgages, car loans, and credit card debt more expensive–burdens that disproportionately affect the middle class.”
Cuts to Social Spending
Another concern that ChatGPT pointed out is that to offset tax cuts or new spending initiatives, the Trump administration could pursue cuts to social programs such as Social Security, Medicare or education funding, “which middle-income Americans rely on more than high earners.”
Some Medicaid “cuts” are already underway as a result of the recently signed One Big Beautiful Bill (OBBB), which changed eligibility criteria for Medicaid.
Job Instability in Non-Tech Sectors
Trump’s economic policies may benefit manufacturing and energy sectors, however, ChatGPT suggested that other sectors, “like education, healthcare, and public service–which employ millions of middle-class Americans–could face instability if funding priorities shift.”
What Can Consumers Do?
Other than voting or expressing concern to legislators, the only real control consumers have is to change their budgeting, spending and other financial habits.
ChatGPT suggested doing such things as:
- Shift spending habits: Consumers may opt for cheaper alternatives, buy secondhand or prioritize domestic brands less affected by tariffs.
- Bulk buy or stock up early: Before tariffs hit, some consumers and businesses could stockpile goods to avoid rising prices.
- Use credit strategically: While not ideal long term, some households may temporarily lean on credit cards or promotional financing to manage cash flow.
- Emphasize budgeting and frugality: Tools like budgeting apps, cash-back programs and meal planning can help households absorb cost increases.
What Policies Need Changing?
While Trump’s OBBB did offer some tax deductions that could help the middle class — such as no tax on tips, no tax on overtime and no tax on car loan interest — many experts feel these benefits are too small and for too brief a term (most sunset in three years) to make a real dent for the average middle-class American. ChatGPT said that to really bring financial relief, lawmakers would need to:
- Institute tariff exemptions or delays: Lawmakers or the administration could exempt specific industries or consumer goods from tariffs (as we’ve seen in the past with items like car parts and baby formula).
- Subsidies or tax credits: To ease the burden, Congress could offer temporary tax relief or credits aimed at middle-income earners — though this would depend on political will.
- Lobbying: Additionally, business groups could lobby heavily against sweeping tariffs. “If costs rise sharply and visibly, their influence may lead to narrowed or delayed implementation.”
What’s Most Likely To Happen
The reality is that consumers will likely get used to adjusting their spending behavior, “cutting back on spending, opting for discount retailers and delaying big purchases” before any policy changes offer relief, ChatGPT said.
As Trump’s economic policies unfold, ChatGPT suggested that the middle class needs to “stay nimble with spending, keep a close eye on inflationary trends and prepare for changes that could hit household budgets first.”
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This article originally appeared on GOBankingRates.com: I Asked Chat GPT How Trump’s Economy Could Backfire on the Middle Class
