Breaking Down Inflation Under Trump vs. Biden

Inflation trends under Donald Trump and Joe Biden reflect sharply different economic environments. During Trump’s first term, inflation remained relatively subdued, generally staying below the Federal Reserve’s 2% target amid stable global supply chains and lower energy prices. Inflation accelerated during Biden’s presidency beginning in 2021, driven by a combination of post-pandemic supply disruptions, expansive fiscal stimulus, and higher energy and housing costs. As Trump’s second term continues, economists caution that proposed trade and immigration policies could exert upward pressure on prices, complicating efforts to return inflation to pre-pandemic norms.

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Do Presidents Impact Inflation?

Presidents can influence inflation indirectly through fiscal policy, regulatory priorities and appointments to the Federal Reserve. However, they don’t control inflation outright.

The Federal Reserve plays a major role by setting interest rates and using monetary policy to manage inflation. It does this independently of the White House. However, presidential policies on taxes, spending, tariffs and immigration enforcement can affect demand, labor supply and supply chains. These factors can, in turn, influence price levels.

For example, large stimulus packages can boost consumer spending, while tariffs may increase input costs for businesses. Immigration policies that reduce the labor force may contribute to wage pressures, which can ripple through to consumer prices.

The timing of economic policy effects is an important consideration when evaluating inflation outcomes. Fiscal, tax and regulatory measures enacted by a presidential administration often take years to fully work their way through the economy, meaning inflation observed today may reflect decisions made under prior leadership. At the same time, the Federal Reserve conducts monetary policy based on longer-term mandates, primarily price stability and maximum employment, rather than electoral cycles. These structural lags complicate efforts to link inflation directly to any single administration.

Beyond domestic policy choices, inflation is also influenced by global economic conditions, commodity and energy prices, and unforeseen disruptions such as pandemics or geopolitical conflicts. While inflation is often attributed to the president in office at the time, price levels are typically shaped by a convergence of factors, including earlier policy actions, private-sector behavior and international economic developments.

Inflation Under Trump

During Donald Trump’s presidency from 2017 to early 2021, inflation remained relatively low and stable. Annual inflation, as measured by the Consumer Price Index (CPI), hovered around 2% or lower for most of his term. In 2020, inflation dropped to just 1.2% due to the economic slowdown brought on by the COVID-19 pandemic. The Federal Reserve continued its low-interest-rate policies during this period, and core inflation stayed subdued even as the economy expanded prior to the pandemic.

Trump’s economic agenda during his first term focused on tax reductions, deregulation and expanded use of tariffs. The 2017 Tax Cuts and Jobs Act supported increased consumer and business activity, yet overall inflation remained relatively contained during this period. While tariffs on Chinese goods and other imports raised prices in select categories, their effect on headline inflation was limited.

Immigration restrictions implemented during the administration may have exerted some pressure on labor supply, although these impacts were generally outweighed by broader economic forces. Toward the end of Trump’s first term, pandemic-related disruptions began to place upward pressure on prices, setting the stage for later inflationary developments.

A sustained acceleration in inflation did not materialize until after Trump left office. The most pronounced price increases occurred beginning in 2021, driven by global supply chain breakdowns, shifts in consumer demand and large-scale federal stimulus measures that extended into subsequent years.

Inflation Under Biden

Inflation rose sharply during Joe Biden’s presidency, especially in the first two years. In 2021, the CPI climbed to 7.0% by December and continued to rise the following year. It peaked at 9.1% in June 2023, the highest levels in four decades.

Multiple factors contributed, including global supply chain disruptions, strong consumer demand, energy price spikes and fiscal stimulus in response to the pandemic.

The American Rescue Plan, enacted in March 2021, injected $1.9 trillion into the economy through direct payments, unemployment benefits and aid to state and local governments. Critics argue this added fuel to inflationary pressure. However, others point to lingering pandemic effects and Russia’s invasion of Ukraine as larger contributors to global price instability.

The Federal Reserve responded with aggressive interest rate hikes starting in 2022, tightening credit and slowing inflation’s momentum. By mid-2023, inflation had cooled considerably but remained above the Fed’s 2% target.

Biden’s administration emphasized infrastructure investment and clean energy spending. Those policies could affect long-term supply dynamics, but had limited immediate impact on inflation trends. Overall, the inflation surge under Biden reflected both domestic policy choices and global economic shocks.

Inflation in Trump’s Second Term

Trump’s second-term economic agenda has centered on a broad expansion of import tariffs, including a 10% baseline tariff on all goods entering the U.S. and steeper rates targeting specific countries like China. Economists expect inflation to climb as the full effect of this strategy plays out.

In the first nine months of Trump’s second term in office (January through September 2025), inflation edged upward by an average of around 2.7%. In April, a universal 10–25% import tariff sparked immediate pressure on consumer prices and contributed to an inflation rate of about 2.7% in June, up from 2.4% in May. In September, the rate rose to 3.0%, ¹ the highest it’s been since January.

Analysts highlight that rapid and broad tariffs covering steel, autos, electronics and more have raised input costs for manufacturers and retailers, who are passing those on to consumers. Deloitte forecasts ² average CPI growth will hit around 2.9% in 2025 and accelerate to about 3.2% in 2026 if tariffs remain elevated.

The Tax Policy Center, which tracks Trump’s tariffs and their impact, estimates that men’s and women’s clothing face tariffs of 30.4% and 36.5%, respectively (as of Dec. 5, 2025). According to the same data, foreign beer and wine face tariff rates of 36.4% and 14.4%, respectively. ³

Inflation Under Trump vs. Biden

Comparing average annual inflation rates between Trump’s first term and Biden’s presidency highlights how broader economic conditions and policy choices shaped each period.

Trump’s term from 2017 to 2020 saw inflation average about 1.9%, with price growth relatively stable amid low interest rates and modest economic expansion. Biden’s four years, by contrast, produced an average annual inflation rate near 5%, reflecting a sharp post-pandemic surge followed by gradual cooling as the Federal Reserve raised interest rates.

These averages, however, can obscure important differences in timing and volatility.

During Trump’s first term, inflation generally moved within a relatively narrow band until the onset of the COVID-19 pandemic reduced economic activity.

Under Biden, inflation rose sharply in 2021 and remained elevated into mid-2023 before gradually moderating.

The distinction between the two periods lies not only in headline inflation rates, but in how prices responded to external shocks, fiscal measures and supply constraints. Similar inflation readings can therefore reflect very different economic conditions depending on when inflation emerged, what factors drove it and how policymakers responded.

Bottom Line

Inflation during the Trump and Biden administrations followed distinct trajectories shaped by differing policy environments and unprecedented external events. While headline figures provide a basis for comparison, broader contextual factors such as pandemic disruptions, supply chain instability and evolving trade policies help explain why inflation intensified, persisted or eased under different circumstances.

Tips for Beating Inflation

• An advisor can help you reassess your portfolio’s inflation sensitivity, rebalance your asset allocation and explore investment opportunities that align with long-term purchasing power preservation. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Focus on the inflation-adjusted (real) performance of your investments rather than just nominal gains. A portfolio earning 5% annually in a 4% inflation environment is effectively growing by just 1%.

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