Core Viewpoint - The article argues that despite the negative impacts of Trump's trade policies, innovation will lead to significant positive supply shocks, ultimately enhancing economic growth and reducing inflation over time [1][4]. Economic Outlook - Following Trump's announcement of comprehensive tariffs, there has been widespread pessimism regarding the short- and medium-term outlook for the U.S. economy, with concerns about recession and the sustainability of fiscal and current account deficits [1]. - The expectation is that the U.S. economy will experience growth recession rather than a full-blown recession, as Trump's more destructive economic policies have shifted to milder forms [2]. Innovation and Growth - The U.S. is expected to maintain its exceptional economic status due to its leadership in revolutionary innovations, which could increase the potential annual growth rate from 2% to 4% by the late 2020s [2]. - The positive impact of technology is anticipated to outweigh the negative effects of tariffs, suggesting that the private sector's dynamism will drive future growth rather than Trump's policies [2]. Debt Sustainability - If the potential growth rate accelerates towards 4%, the ratio of public and external debt to GDP is likely to stabilize and eventually decline, countering predictions of rising debt ratios based on lower growth assumptions [3]. - The U.S. current account deficit may remain high due to increased investment driven by technology, while the savings rate stays relatively stable, leading to a balance through securities investment inflows [3]. Dollar's Global Status - The dollar's status as the world's primary reserve currency is unlikely to be significantly challenged, even with rising tariffs, as structural capital inflows will mitigate downward pressure on the dollar [3]. - The article emphasizes that the ongoing technological innovations will create substantial positive supply shocks, which are expected to outweigh the potential damages from inflationary policies [4].