The west front of the U.S. Capitol, where economic policy on tariffs and the budget is set

U.S. Economic Policy Explained: Tariffs, $2 Trillion Deficit and a Cooling Job Market

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Key numbers (as of Oct. 14, 2026)

  • Tariffs: The Supreme Court struck down the IEEPA tariffs on Feb. 20, 2026. A 10% global Section 122 tariff expired July 24. Since July 23, Section 301 tariffs of 10% or 12.5% have applied to 60 economies, and Section 232 duties of up to 50% (100% on some pharmaceuticals) apply to specific goods.
  • Federal deficit: $2.0 trillion for fiscal 2026, up $218 billion from fiscal 2025 (CBO, Oct. 8). Net interest topped $1 trillion.
  • Shutdown status: The government is open and funded through Dec. 11, 2026, under a continuing resolution (P.L. 119-103).
  • Jobs (September, released Oct. 2): +29,000 payroll jobs; unemployment rate 4.2%; July and August revised down by a combined 60,000.
  • Massachusetts (August): unemployment rate 4.3%; September state data is due Oct. 16.

U.S. economic policy is being set by three forces this fall: tariffs rebuilt on new legal footing after a Supreme Court defeat, a $2 trillion federal deficit with a Dec. 11 funding deadline, and a cooling job market. Here is where each stands as of Wednesday, Oct. 14, 2026, three weeks before the Nov. 3 midterm elections.

Photo: The west front of the U.S. Capitol. Architect of the Capitol / Wikimedia Commons, public domain.

Tariffs after the Supreme Court IEEPA ruling

On Feb. 20, 2026, the Supreme Court ruled that President Trump could not use the International Emergency Economic Powers Act (IEEPA) to impose the tariffs at issue, according to a Congressional Research Service legal sidebar. The administration then switched to other trade laws, the CRS said in an Oct. 8 fact sheet covering tariffs in effect as of Sept. 30.

  • Section 122: a 10% global tariff, which the law limits to 150 days without approval from Congress. It expired July 24, 2026.
  • Section 301: on July 23, the president imposed tariffs of 10% or 12.5% on 60 economies after a U.S. Trade Representative investigation into forced-labor import bans, with exemptions that include USMCA-compliant goods. Brazil faces a separate 25% Section 301 tariff.
  • Section 232: product tariffs remain on steel and aluminum (10% to 50%), copper (10% to 50%), autos and parts (15% to 25%), certain semiconductors (25%), patented pharmaceuticals (10% to 100%) and lumber (10% to 25%). Duties on polysilicon start Dec. 4, 2026.
  • Section 338: 50% tariffs on select Canadian goods, including motor vehicles, alcoholic beverages and dairy, on top of any Section 232 duties.

Refunds of the struck-down IEEPA duties are moving through U.S. Customs. A federal court certified a nationwide class of importers on Oct. 8, Supply Chain Dive reported. For a running tally of trade actions, see our Trump Presidency Tracker.

Federal budget, deficit and debt

The federal deficit for fiscal 2026, which ended Sept. 30, was about $2.0 trillion, the Congressional Budget Office estimated in its Oct. 8 Monthly Budget Review. That was $218 billion more than in fiscal 2025. Net interest on the debt topped $1 trillion, driven by higher debt and higher interest rates, and tariff refunds also added to the gap, according to the CBO and CNN.

In its February Budget and Economic Outlook, the CBO projected a $1.9 trillion deficit for fiscal 2026. It also projected that debt held by the public would equal 101% of GDP in 2026 and rise to 120% by 2036. With the 10-year Treasury yield near 5.2% after Wednesday’s inflation report, interest costs remain a central budget issue. See our markets report for Oct. 14 for details.

Shutdown status: funded through Dec. 11

There is no government shutdown. Congress passed the Continuing Appropriations and Extensions Act, 2027 (H.R. 6500), which became P.L. 119-103. It funds most agencies at fiscal 2026 levels through Dec. 11, 2026, according to a CRS overview. If Congress does not pass full-year appropriations or another stopgap by then, a lapse in funding could begin Dec. 12.

Jobs data: the September BLS report and data gaps

Employers added 29,000 jobs in September, and the unemployment rate rose to 4.2% from 4.1%, the Bureau of Labor Statistics reported Oct. 2. The BLS said payroll growth had averaged 45,000 a month over the prior 12 months. The unemployment rate has stayed between 4.1% and 4.3% since March.

July and August were revised down by a combined 60,000 jobs, The Washington Post reported. Wages rose 3.0% from a year earlier, down from 3.1% in August, Reuters reported. With consumer prices up 3.7% over the same period, wages are falling behind inflation.

Some economists noted that payrolls tend to come in weak when Labor Day falls late in the month, Reuters reported. Data users also still face a gap from last year: the 2025 government shutdown meant no October 2025 CPI or household-survey unemployment rate was published, so some year-over-year comparisons for that month are incomplete. September’s report was the last before the election. The October report is scheduled for Nov. 6, according to the BLS.

The Massachusetts angle

Massachusetts unemployment was 4.3% in August, above the national rate, and the state lost 7,100 jobs that month but was up 8,300 from a year earlier, according to state data compiled on our Boston Job Market tracker. The City of Boston’s rate was 4.4%, not seasonally adjusted.

The state’s September figures are due Friday, Oct. 16. The BLS publishes its national state release on Oct. 20 and metro-area data on Oct. 28, according to its schedule. Tariffs on Canadian goods and higher diesel prices also matter for New England, which trades heavily with Canada and pays more than most of the country for heating fuel and diesel.

For more coverage of the Fed, markets and policy, see our Economics hub.

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