America’s economy looks strong, but inflationary tariffs and a narrow AI construction boom are distorting the picture. 

America’s latest GDP report shows a three-percent annualized gain, but the headline hides more than it reveals. Two forces distort the picture in opposite ways. A wave of artificial-intelligence construction is adding genuine output, while a tariff-driven collapse in imports is giving the numbers an accounting lift even as it raises prices for families. Neither trend can carry growth for long.   

Corporate America is pouring billions into new data centers, high-end chips, and power systems to keep the AI boom humming along. Analysts at Carlyle calculate that this surge in AI infrastructure delivered more than one-third of second-quarter GDP growth. Spending on data-center construction has quadrupled since 2020 and will keep rising into 2026, but the pace is expected to taper as the first wave of facilities comes online.   

The other boost is illusory. Imports of consumer goods plunged more than twelve percent in June, shrinking the goods-trade deficit to its smallest level in nearly two years. Because GDP counts imports as a negative, that collapse alone nudged the growth figure upward. Economists tie the drop directly to President Trump’s new tariff schedule, which pushed retailers to pull orders forward in the winter and scale back sharply once the levies hit.  

Those same tariffs now threaten household purchasing power. Yale’s Budget Lab estimates they will raise consumer prices about 1.7 percent this year and cut real income by roughly $2,300 per household, before the next rounds of tariffs kick in.  

There are already signals from the retail sector that show the squeeze arriving early. To give one example, Oreo-maker Mondelez reported a 3.5 percent drop in North-American snack sales as anxious shoppers switch to smaller packs or skip treats altogether.   

The real pain starts on August 29, when the administration ends the long-standing de minimis rule that lets packages worth up to $800 enter duty-free. Every cross-border e-commerce purchase will face either a new levy or a flat fee of up to $200 during a transition period. What looks like a minor procedural change is, in practice, a nationwide sales-tax hike that households cannot avoid. 

Stack the numbers together and the outlook suddenly looks less rosy. Consumer spending rose only 1.4 percent last quarter, far below the rates that normally sustain a growing economy. When AI construction eases and tariff costs spread through supply chains, the accounting boost from imports will vanish, but the inflation shock will stay. There is the potential for growth to swing from three percent to negative in a matter of months. 

Congress still has a pressure valve. The bipartisan Trade Review Act would force any new tariff to expire after sixty days unless both chambers vote to keep it. It offers a simple, constitutional check that protects households without surrendering America’s leverage abroad.   

August is typically a quiet time in Washington as lawmakers head back to their home states. But if tariffs keep muting consumer demand while AI investment peaks, the next GDP report  could show just how flimsy the current growth may actually really be.