As has become his norm, President Donald Trump laced his record-long State of the Union address with numerous falsehoods, exaggerations and distortions. It’s extraordinary that his speechwriters cannot manage to rein in at least some of his remarkable statements – like his claim that $18 trillion of new investments were secured in the first year of his presidency when even the White House website only claims $9.7 trillion (which is itself impossible to believe).
“When I spoke in this chamber 12 months ago, I had just inherited a nation in crisis, with a stagnant economy, inflation at record levels… Today our border is secure, our spirit is restored, inflation is plummeting, incomes are rising fast, the roaring economy is roaring like never before”
This can almost not be further from the truth. For starters, the economy was hardly stagnant. In fact, it had grown faster in each of the two years before Trump took office than it grew in 2025: 3.4% in 2023 and 2.4% in 2024. Why the slower growth in 2025? A mix of factors, including reduced immigration, Trump’s tariffs, slow hiring and the government shutdown in the fourth quarter. Consumer spending increased but that was principally driven by Americans in the upper income brackets.
Nor did Trump inherit “inflation at record levels.” Indeed, inflation had already fallen sharply from its Covid-era highs and was around 3% when Trump took office. And while the rate of increase in the Consumer Price Index was down to 2.4% by year end, a more accurate measure of price increases favored by the Federal Reserve – the Personal Consumption Expenditures index – had risen to a 2.9% rate from 2.6% when Trump arrived. Fed chairman Jerome Powell has attributed most of the excess above 2% to the Trump tariffs.
“More Americans are working today than at any time in the history of our country.”
Well, that might be technically true but it’s highly misleading. Job growth during Trump’s first year fell markedly from the prior year, an average of just 15,000 jobs a month, compared to 122,000 jobs a month the prior year. The number of manufacturing jobs fell while healthcare employment accounted for more than 100% of the jobs that were created. Meanwhile, the unemployment rate rose to 4.3% from 4% when Trump took office. Lastly, long term unemployment increased; a quarter of those unemployed have been out of work for more than 26 weeks.
“Moving forward, factories, jobs, investment and trillions and trillions of dollars will continue pouring into the United States of America because we finally have a president who puts America first.”
Nor are factories “pouring into the United States of America.” Spending on manufacturing construction declined steadily during 2025 as Trump imposed tariffs (which increase uncertainty around input costs) and moved to halt Biden-era investment programs, like the poorly-named Inflation Reduction Act.
Tariffs increase uncertainty around input costs for manufacturing, which delays investment. Biden-era investment includes CHIPS and the IRA.
“And as time goes by, I believe the tariffs, paid for by foreign countries, will, like in the past, substantially replace the modern-day system of income tax, taking a great financial burden off the people that I love.”
The idea that tariffs could “substantially replace” – or anything like it – the income tax is laughable. Washington collects about $2.7 trillion a year in personal income taxes. By comparison, last year all of Trump’s tariffs amounted to $264 billion of revenue. Indeed, the total amount of U.S. imports is not much more than the amount of income tax that is collected. (And now, of course, even the current level of tariff revenues is in doubt.)
Nor are the vast bulk of the tariffs paid by “foreign countries.” A recent study by the Federal Reserve Bank of New York found that nearly all of the tariffs are paid by U.S. importers, much of which is passed on to consumers in the form of higher prices.
