Economic Comparison: Donald Trump vs. Joe Biden Administrations

By Ananya Mirani

The economic policies and outcomes of the Donald Trump and Joe Biden administrations offer a distinct contrast that reflects different governing philosophies and very different starting conditions. Trump entered office during an ongoing economic expansion. Biden took office amid the disruption caused by the COVID-19 pandemic. Although both presidencies confronted overlapping issues such as taxation, trade, labour markets, healthcare costs, and public spending, the context surrounding their decisions shaped results in important ways. This essay compares key economic indicators, including GDP growth, unemployment, tax policy, federal spending, national debt, and trade approaches, in order to examine the economic legacies of both administrations.

Trump’s first three years in office coincided with continued growth in an already expanding economy. From 2017 through 2019, real GDP growth averaged about 2.5% per year. In 2019, growth registered 2.3%, which marked a period of steady expansion during which the administration’s tax cuts and deregulation agenda were credited by supporters with encouraging business investment. The outlook changed sharply in 2020 when the COVID-19 pandemic triggered sweeping shutdowns and a collapse in activity. U.S. GDP fell by 3.4% that year, the worst annual contraction since the Second World War. (U.S. Bureau of Economic Analysis, 2021.)

The Biden administration inherited that contraction. With the passage of the American Rescue Plan (ARP) in early 2021, large-scale fiscal support, expanded unemployment benefits, and a rapid national vaccination push supported reopening and a strong rebound. Real GDP growth surged to 5.7% in 2021, the fastest annual pace since 1984. (U.S. Bureau of Economic Analysis, 2022.) Growth moderated after the initial rebound. As of mid 2023, forecasts placed U.S. growth near 2.3% for the year. (IMF, 2023.) Trump presided over expansion that ended in a pandemic-driven recession. Biden presided over the early recovery from that recession.

Labour market movements followed a similar arc. Under Trump, the unemployment rate trended downward and reached 3.5% in February 2020, the lowest level in roughly fifty years. (U.S. Bureau of Labor Statistics, 2020.) Pandemic shutdowns then drove unemployment up to 14.8% in April 2020 as businesses closed and layoffs spread across the economy. Conditions improved as activity resumed, and the rate had fallen to 6.3% by January 2021 when Biden took office. The new administration’s ARP stimulus, support for state and local governments, and vaccination rollout helped accelerate rehiring. By August 2022, unemployment was down to 3.7%, close to pre pandemic lows. (U.S. Bureau of Labor Statistics, 2022.) Between January 2021 and mid 2023, the economy added more than 12 million jobs, a pace associated with one of the fastest employment recoveries on record. (U.S. Department of Labor, 2023.)

Tax policy represents one of the clearest dividing lines. Trump signed the Tax Cuts and Jobs Act (TCJA) in 2017. The law lowered the corporate income tax rate from 35% to 21% and reduced individual income tax rates across several brackets, with many of the benefits flowing to middle and upper middle income households and corporations. Advocates argued that the changes would stimulate investment and raise growth. Critics countered that the law disproportionately benefited wealthier taxpayers and widened deficits. (Tax Foundation, 2017.) The combination of tax cuts and subsequent pandemic spending contributed to a sharp increase in the federal deficit, which climbed to $3.1 trillion in fiscal year 2020. (U.S. Treasury Department, 2020.)

President Biden proposed reversing part of the corporate rate cut and raising taxes on higher earners to help fund public investment in infrastructure, education, and healthcare. His proposals included lifting the corporate rate to 28% and increasing the top individual rate for those earning over $400,000. Although not all of these plans were enacted in full, the administration moved forward on international tax coordination, backing a 15% Global Minimum Tax agreement through the Organisation for Economic Co operation and Development in 2021. (OECD, 2021.) Biden’s broader agenda has linked tax reform to public investment and social support programmes, including the American Rescue Plan and expanded child tax credit proposals.

Federal spending and debt expanded under both administrations, though the composition differed. Trump oversaw increases in defence outlays and the 2017 tax reductions, and he signed large emergency measures in response to COVID 19. The most prominent of these was the CARES Act, a roughly $2 trillion relief package enacted in March 2020 to support households, businesses, and healthcare providers. (Congressional Research Service, 2020.) By the end of his term, the national debt had risen above $27 trillion. (U.S. Treasury Department, 2021.)

Biden also relied on large scale fiscal measures. The American Rescue Plan totalled about $1.9 trillion in early 2021. Later that year, the Infrastructure Investment and Jobs Act funded transportation networks, broadband expansion, and clean energy initiatives. Continued spending pushed the national debt above $31 trillion by 2023. (U.S. Treasury Department, 2023.) Supporters of Biden’s approach argue that these investments are designed to yield longer term productivity gains by upgrading physical and social infrastructure. Critics warn that sustained deficits could weigh on future fiscal flexibility.

Trade policy was another area of contrast in style, though some substance carried over. Trump advanced an America First trade agenda that emphasised bilateral leverage, tariffs, and renegotiation of existing agreements. His administration launched a tariff confrontation with China, applying duties on hundreds of billions of dollars of imports in an effort to address concerns about intellectual property, market access, and trade imbalances. (U.S. Trade Representative, 2020.) Trump also renegotiated the North American Free Trade Agreement, replacing it with the United States Mexico Canada Agreement (USMCA), which included updated rules of origin and labour provisions intended to protect U.S. industry.

Biden maintained a firm position on China but shifted tone toward traditional alliances and multilateral engagement. Many of the Trump era tariffs remained in place, yet the administration pursued diplomatic coordination with partners in Europe and Asia, integrated climate and public health priorities into economic diplomacy, and sought cooperative approaches to supply chains and technology governance. The result has been partial continuity in hard line positions where consensus exists, combined with greater emphasis on alliance building.

In summary, the Trump and Biden administrations approached economic policy from different starting points and with different tools. Trump cut taxes, rolled back regulations, and leaned on protectionist trade measures during a period of expansion that ended in a pandemic collapse. Biden inherited the downturn and used large fiscal stimulus, public health mobilisation, and proposed tax increases on corporations and high earners to drive recovery and invest in long term capacity. Both administrations expanded federal spending and contributed to rising national debt, although Biden’s programmes placed more weight on infrastructure, social policy, and future oriented investment. As the United States continues to navigate inflation risks, geopolitical competition, and long run fiscal challenges, the contrasting choices made under these two presidents provide a useful frame for evaluating policy trade offs and economic strategy.

References

1. Tax Foundation. (2017). "The Impact of the Tax Cuts and Jobs Act." Retrieved from taxfoundation.org.

2. U.S. Bureau of Economic Analysis. (2021). "Gross Domestic Product, 2020." Retrieved from bea.gov.

3. U.S. Bureau of Labor Statistics. (2020). "Unemployment Rates During the Trump Administration." Retrieved from bls.gov.

4. U.S. Treasury Department. (2020). "Fiscal Year 2020 Federal Deficit." Retrieved from treasury.gov.

5. Congressional Research Service. (2020). "The CARES Act: Overview and Economic Impact." Retrieved from crsreports.congress.gov.

6. OECD. (2021). "Global Minimum Tax Agreement."

7. U.S. Bureau of Economic Analysis. (2022). GDP data for 2021 rebound.

8. International Monetary Fund. (2023). World Economic Outlook projections for U.S. growth.

9. U.S. Bureau of Labor Statistics. (2022). Unemployment rate data, August 2022.

10. U.S. Department of Labor. (2023). Employment gains since January 2021.

11. U.S. Treasury Department. (2021, 2023). National debt statistics.

12. U.S. Trade Representative. (2020). Section 301 tariffs and trade actions on China.

Ananya Mirani is a first year student at O.P. Jindal Global University in the B.A. (Hons.) Global Affairs programme, where she focuses on political economy and public finance. She is interested in macroeconomic policy, taxation, and how government spending shapes long term growth. Ananya contributes to student led research projects that track fiscal stimulus and labour market data, and she enjoys translating complex policy debates into clear writing for wider audiences.