The potential economic collapse tied to Donald Trump’s tariffs appears unlikely for now, thanks to a robust American economy and Trump’s recent pragmatic shifts away from a strict tariff policy.

The current economic landscape shows Americans enjoying considerable wealth, with household assets reaching historic highs—despite a significant concentration of wealth among a small population. Retail sales rose by 1.4 percent in March, largely driven by consumers making purchases before the trade tariffs took effect. American Express indicated a strong first quarter, with revenues up by 8 percent compared to last year, noting that their clientele is actively dining out and enjoying leisure activities. Bank of America’s CEO, Brian Moynihan, affirmed a solid consumer base, highlighting sustained spending.

The labor market also demonstrates stability, with Federal Reserve Chair Jerome Powell describing conditions as “solid.” The unemployment rate stands at 4.2 percent—viewed as a favorable position by Powell. Average hourly earnings are reportedly increasing at an annualized rate of roughly 4 percent, outpacing inflation. While there are nearly an equal number of job openings and unemployed individuals, the job market for new graduates is not as promising as it once was.

Inflation trends remain volatile and unlikely to hit the Federal Reserve’s target of 2 percent in the near future. While some individuals see real wage growth and a decrease in gas prices, inflation continues to concern many consumers, particularly as it relates to the impending effects of new tariffs on everyday goods.

Amid various pressures, some burdens on Americans are being alleviated. Trump’s border policies and law enforcement measures have received public support, with many agreeing that merit-based advancement is preferable to Diversity, Equity, and Inclusion initiatives, and that there should be restrictions on transgender athletes competing in women’s sports.

Regarding tariffs, the current global trading framework was crafted post-World War II to aid devastated economies while suppressing the spread of communism. Secretary of the Treasury Scott Bessent argued in a recent World Bank and IMF meeting that policies of other countries have significantly diminished America’s manufacturing sector, compromising national security.

This statement was made in front of numerous global financial leaders, including central bankers from China, who expressed concerns regarding the potential depletion of a trading system that has favored them for 70 years. Many executives proposed reducing barriers to American goods in exchange for lower tariffs within ongoing negotiations.

Domestic leaders echoed the urgency of the situation, as CEOs from major retail companies like Target and Walmart warned Trump of potential supply chain disruptions that could lead to scarcity and price hikes. Companies such as PepsiCo and Procter & Gamble have reported that these issues are already beginning to manifest, sparking concern among Republicans about possible electoral repercussions in upcoming midterms.

In response, Trump is reportedly making concessions. Consumer electronics have been granted temporary tariff exemptions, and American auto manufacturers are excluded from tariffs on China and certain materials like steel and aluminum. Expect negotiations for trade agreements to develop shortly.

With potential barriers to American goods being dismantled, exports are projected to rise. Significant foreign and domestic investments in new manufacturing facilities are being announced regularly, focusing on cutting-edge industries such as chip manufacturing and pharmaceutical production, rather than traditional sectors.

As the dust settles after various corporate moves, there’s a promising outlook for a more efficient government emphasizing programs beneficial to the American populace. The dollar, despite some setbacks, is expected to retain its status as the world’s reserve currency, alongside America’s dominance in capital markets. Tax reductions aimed at stimulating growth and the reduction of constraining regulations are also anticipated.

Ultimately, it remains uncertain whether the advantages gained from current economic policies will outweigh the potential drawbacks of tariffs, as prolonged negotiations shape their final structure. This strategy aligns with Trump’s goal of maintaining high uncertainty levels, compelling businesses and consumers to closely monitor his decisions. Thus, for the time being, ambiguity remains the only constant.

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Irwin Stelzer is a business adviser