Donald Trump has never been shy about using superlatives, and his so-called “Big Beautiful Bill” is no exception. Combining more than $1 trillion in additional federal spending with sweeping tariffs on over 500 categories of imports, this legislative cocktail is being hailed by his supporters as a masterstroke of economic nationalism.
But dig a little deeper and the bill begins to look less like a revival of American strength and more like the trigger for a global inflationary spiral.
The bill’s structure is almost surreal in its contradictions. On the one hand, it opens the fiscal floodgates, pumping stimulus into an already strained economy. On the other, it slaps import duties on everything from clean tech to industrial components, throttling supply chains and raising the cost of doing business. In macroeconomic terms, it’s akin to revving the accelerator while pulling the handbrake.
Economists are already sounding the alarm
Economists and investors are already sounding the alarm. The effective tariff rate on Chinese goods alone is set to more than double, rising from 8% to an estimated 17.5%. That means higher prices at the checkout counter for American consumers, increased input costs for manufacturers, and—most critically—pressure on inflation at a time when central banks were finally beginning to exhale.
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This is not stimulus in the traditional sense. Unlike pandemic-era relief or even wartime spending, Trump’s package is being pitched as a permanent reset: a structural transformation of trade and fiscal policy rather than a short-term boost. That makes it far harder to unwind—and far more dangerous if it backfires.
Why the rest of the world needs to worry
The implications extend far beyond American borders. When the United States exports inflation, it doesn’t do so quietly. Emerging markets, already vulnerable to capital flight and currency instability, will bear the brunt. Europe, still struggling with energy costs and anaemic growth, will find itself once again battling imported price shocks. And global investors will respond, as they always do, by demanding more compensation to hold sovereign debt.
In market terms, the signs are already flashing. Long-term bond yields are edging higher. Oil prices are rising. Gold and Bitcoin—two assets that thrive on fears of monetary debasement—are gaining traction again. For the Federal Reserve, which had planned a cautious easing of rates, the political bombast of Trump’s bill is a direct challenge to its credibility.
There’s something unnervingly familiar about all this. The 1970s taught us what happens when inflation is ignored or politically weaponised. Back then, a toxic mix of easy money, supply shocks, and erratic fiscal policy left economies around the world reeling for a decade. It took Paul Volcker and sky-high interest rates to bring order back. Trump’s bill threatens to reopen that painful chapter—with far less discipline at the helm.
The most galling aspect of this legislation isn’t its scale or even its economic recklessness. It’s the political calculus underpinning it. Designed for election-year optics rather than long-term strategy, the bill panders to protectionist instincts and populist narratives.
Inflation is coming back folks
Reindustrialisation is a noble goal, but it cannot be achieved by breaking the basic arithmetic of trade and inflation. You do not become more competitive by isolating yourself. Nor do you build resilience by punishing global supply chains while throwing borrowed money at domestic demand.
Trump’s boosters will trumpet the bill as a rallying cry for America First economics. But history will likely record it differently. This is not the rebirth of American manufacturing or a clever bid to win over disaffected workers. It is a monument to economic short-termism, dressed up in the language of revival.
For investors, the message is clear: inflation is no longer yesterday’s problem. It’s coming back—and this time it may stick around longer than anyone expects. The era of cheap money and low inflation is over. What replaces it may well be defined by the consequences of this single, brash piece of legislation.
The “Big Beautiful Bill” may prove historic. Just not in the way its architects hope.
