US Economic Growth Gets Boost from AI Investment, but Long-Term Gains Remain Uncertain

US President Donald Trump’s promise of a new golden age for the American economy remains uncertain, as economic growth continues at a moderate pace despite sweeping policy changes. The administration expects tariffs, tax cuts, tighter immigration controls and deregulation to boost domestic manufacturing and expand productive capacity. However, economists estimate the underlying trend growth rate at around 2%, with quarterly growth showing limited improvement compared with previous years.

While tariffs were intended to reduce import dependence and bring manufacturing jobs back to the US, imports have continued to rise, partly driven by demand for components used in artificial intelligence (AI) data centres. The US Supreme Court has struck down some tariffs as unconstitutional, prompting the administration to explore alternative measures. Meanwhile, business investment has surged as companies race to build data centres and expand AI infrastructure. Corporate tax incentives introduced under Trump’s One Big Beautiful Bill Act have also encouraged investment, making it a significant contributor to economic growth.

AI could eventually transform productivity, increase economic output and ease inflationary pressures, but its broader impact remains uncertain. Although recent data show gains in labour productivity, economists caution that it is too early to attribute them directly to AI. Concerns over data centres’ electricity consumption, local opposition and rising power bills have also emerged. With the Congressional Budget Office projecting potential growth of around 1.8% over the longer term, the extent to which AI and the administration’s policies can fundamentally reshape the US economy remains to be seen.

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