Tax & Trade Data | 2026 Tax & Trade Policy Dashboard

Two major fiscal policy changes occurred in 2025: the One Big Beautiful Bill Act (OBBBA) and a new tariff regime. While the effects of the policy changes will take years to fully materialize and years more to study, we can now consider how relevant variables have moved to date in response.

The OBBBA made expiring individual income tax changes permanent, introduced new temporary tax breaks for specific types of income, and provided full deductibility of domestic research and development (R&D) and equipment investment on a permanent basis. Tax Foundation estimates the new law will reduce federal tax revenue by $5.2 trillion over the coming decade before accounting for changes in federal spending and economic growth.

Tariffs increased significantly in 2025, with great variability in introduction, effective dates, applied rates, exempted and included goods, and repeal. Broadly, Section 232 tariffs were imposed on approximately $600 billion of specific imported products (steel, aluminum, cars, trucks, and furniture). Tariffs introduced under the International Emergency Economic Powers Act (IEEPA) applied to nearly all US trade partners; rates varied by country and were often raised, reduced, or delayed. In February 2026, the Supreme Court ruled the IEEPA tariffs unconstitutional, and the Trump administration responded by introducing new tariffs under Section 122 authority, affecting $1.2 trillion of imports.

Both fiscal policy changes have myriad goals. Before looking at the data, it is important to note: establishing causation is hard. Even when a counterfactual is available, such as a forecast of GDP or business investment made before a policy change took effect, it is not possible to attribute the gap between the forecast and actual events to any specific policy change. The forecast could be mistaken, for one, but more importantly, multiple factors have changed in the meantime. This applies to fiscal policy in 2025: for example, we expect the OBBBA’s permanent expensing provisions for R&D and equipment investment to have a positive effect on business investment, while we expect tariffs to have a negative overall effect on business investment. Limits to tax credits for green energy would also be expected to affect investment. Additionally, factors outside of fiscal policy have changed, including the rapid advance of artificial intelligence as well as geopolitical tensions and conflicts that were not anticipated or incorporated into previous forecasts.

US Trade Deficit in Goods

Foreign Direct Investment in the US

Private Fixed Investment

Private Nonresidential Fixed Investment (With a Counterfactual)

Private Construction Investment (With and Without AI-Related Industries)

The United States consistently consumes more goods than it produces, resulting in a trade deficit. A trade deficit is driven by macroeconomic forces: the balance between national saving and national investment. When investment in the US outpaces saving, foreign capital flows into the US to make up the difference, leading to a capital account surplus and a current account (or trade) deficit as current spending exceeds current saving.

One of the stated purposes of the Trump tariffs is to reduce the trade deficit. A trade deficit is not necessarily a problem to solve. A trade deficit may reflect capital inflows that support productivity-enhancing investment or that support government expenditures that only create future liabilities for repayment. Tariffs will not be effective in fundamentally changing the balance of trade because they do not fundamentally change the saving-investment balance.

The goods trade deficit in 2025 was little changed from 2024 overall, though import patterns were significantly disrupted.

Foreign direct investment occurs when an individual or company from a foreign country makes a long-term investment in a US business. FDI is part of the capital account surplus: the capital that comes into the US to fund investment opportunities not fulfilled by domestic saving.

At a high level, FDI supports economic growth because it funds investment the US cannot fund or is not funding. FDI contributes to GDP but contributes slightly less to national income. For example, consider a foreign car company that opens a factory in the United States. The entire output of the factory (the cars it produces) counts as American GDP. Meanwhile, the income earned by the factory workers counts toward national income, but the profits that accrue to the factory owners, assuming the shareholders of a foreign company are mostly foreign, generally would not.

President Trump has also championed foreign countries (in practice, usually foreign companies) investing in the United States. Increasing FDI and reducing the trade deficit work at cross-purposes. While various firms and countries have pledged, sometimes vaguely, to increase US investment, so far, those investments have not shown in broad macroeconomic statistics. Aggregate FDI flows have remained within a typical range rather than exhibiting a sharp increase.

Private fixed investment is spending on assets used in the production of goods and services. Private fixed investment drives long-run economic growth. New investment raises worker productivity, the key driver of lifting wages and quality of life in the long run.

It comprises four categories: residential investment (such as owner-occupied housing structures, rental housing structures, and furnishings and appliances in rental housing), nonresidential structures, equipment, and intellectual property (R&D, software, and original works of art and entertainment).

The OBBBA reduced the after-tax cost of capital for equipment, R&D, and a small portion of nonresidential structures, but tariffs have increased the cost of certain capital equipment and intermediate inputs.

Private nonresidential fixed investment includes private fixed investment in nonresidential structures, equipment, and intellectual property. The OBBBA improved the tax treatment of most assets in this category through full expensing of domestic R&D, equipment, and manufacturing structures (which constitute a fraction of total nonresidential structures investment), but tariffs have increased the cost of certain capital equipment and intermediate inputs.

The chart compares a forecast of private nonresidential fixed investment from the Congressional Budget Office’s January 2025 economic outlook to the most recent Bureau of Economic Analysis (BEA) print. So far, the comparison suggests that investment is outpacing projections.

Massive capital spending announcements from companies involved in artificial intelligence development have been widely reported. This raises the question of whether aggregate investment trends are driven by this industry-specific dynamic. The presence of such a dynamic does not preclude policy effects; marginal investment decisions are still being made in a booming industry.

To evaluate this question, the chart displays investment patterns both including and excluding AI-related industries. It starts with the Census Bureau’s monthly Value Put in Place data on private nonresidential construction (a data set used as an input for BEA’s structures investment data). Then, it subtracts out three subcategories: data centers; electric structures, as expectations of increased electricity demand drive new investment; and computer and peripheral equipment manufacturing structures, which largely consists of semiconductor fabrication facilities.

The Census Bureau’s data is nominal, and the analysis adjusts for that using a construction materials price index as a deflator, consistent with prior methodology used by the White House. Construction materials prices increased much more than headline inflation from 2021 to 2023, and using headline inflation alone would overstate real construction spending during the period.

Growth in construction spending leveled off at the end of 2023 and subsequently declined. While AI-related construction is flatter than the rest of nonresidential construction spending, they do not diverge substantially.

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