Analysis of the inflationary effects of Trump’s economic policies
By: Tobiashus Swatherton
It is no secret that President Trump came into office guns a-blazing. On day one, he pulled out of the World Health Organization, withdrew from the Paris Climate Accords, and even attempted to end birthright citizenship. According to Trump, his reforms are all for the sole purpose of bolstering the economy: “Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.” However, Trump’s policies concerning tariffs, tax cuts, and mass deportation will not bolster the American economy as he claims but rather increase inflation and harm Americans as a result.
President Trump’s tax cuts will push America’s GDP to unsustainable levels and put the economy at risk of inflation and a recession. In total, all of his tax cuts will cost the government three trillion dollars over the next ten years. Typically, the government only implements tax cuts during times of economic hardship, because they increase inflation and GDP. However, this only works if the economy can sustain that increase in GDP. Currently, the United States’ inflation rate is above the target of 2%, the unemployment rate is below the natural unemployment rate, and the GDP is above the potential GDP. When this happens, the economy will inevitably return to sustainable levels. Therefore, the larger the disparity between a country’s sustainable levels and real GDP, the larger the crash will be. Not only do Trump’s tax cuts increase spending and therefore inflation, but they also increase the odds that the economy will enter a recession as a result of long periods of unsustainable economic growth. It is easy to conclude that low unemployment and high GDP are hallmarks of a strong economy. However, the truth is that unsustainable economic growth hurts economies rather than bolstering them.
Because of President Trump’s mass deportation policies, the price of labor will increase, which will increase inflation and the price of goods and services for Americans. Trump has often blamed undocumented workers for hurting the American economy. At a rally in Pennsylvania, he claimed, “[illegal immigrants are] going to be attacking—and they already are—Black population jobs, the Hispanic population jobs, and they’re attacking union jobs too.” However, this paints too black and white of an image. Undocumented workers make up 10% of all agricultural occupations, 7% of home health aides, and significant portions of many other sectors in the American economy. If the government deported all these undocumented workers, more expensive American workers would replace them to keep these industries operational. Consequently, the price of goods and services would increase. Therefore, Americans will have to pay more money for food, healthcare, and every other good and service affected by the very inflation Trump promised to prevent. Once again, Trump’s economic policies appear to help American workers on the surface but do the exact opposite upon closer examination.
President Trump’s tariffs will cause the price of goods to rise, causing inflation to rise and preventing the average American from being able to afford necessities. Trump has repeatedly pushed for tariffs on the countries America imports from the most, which are China, Mexico, and Canada. Specifically, he vowed to impose 60% tariffs on all Chinese imports, 100% on Chinese electric vehicles, and 25% on all imports from Mexico and Canada to help protect American businesses. According to the World Bank, 36% of consumer goods are imported in America. Therefore, over one-third of the goods the average American buys will rise in price anywhere from 25%-100%. By definition, these tariffs will dramatically increase inflation. This means food, housing, and other staples will increase in price while wages remain stagnant and the average American will be hurt due to Trump’s policies. In short, these repercussions to the American people nullify the supposed benefits Trump claims tariffs will bring.
Although Trump’s economic policies may see some benefits in the short-term, that does not downplay the consequences they will have on inflation and the increase in cost of living. Trump’s slogan in 2016 was “Make America Great Again.” However, jeopardizing the economy and making it more expensive to live in does not achieve Trump’s goal.
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