Trump economic policies/ U.S. economy 2025/ Trump second term economy/ tariffs and inflation/ Trump tax cuts impact/ WASHINGTON/ Newslooks/ J. Mansour/ Morning Edition/ President-elect Donald Trump’s return to the White House promises bold economic policies, including extending tax cuts, imposing tariffs, and deporting undocumented workers. Economist Paul Ashworth predicts mixed outcomes: a strong economy inheriting inflationary risks from tariffs and immigration policies, while fiscal concerns loom large with rising national debt.
What Lies Ahead for the U.S. Economy Under Trump
Key Insights from Economist Paul Ashworth
- Inherited Economy: Trump takes over a robust economy with low unemployment and steady growth, though consumers remain uneasy about inflation.
- Key Economic Priorities: Extending Trump-era tax cuts and managing a ballooning national debt are top fiscal challenges.
- Tariff Impacts: A 10% universal tariff could raise consumer goods prices, adding up to 1% to inflation.
- Immigration Policies: Mass deportations may disrupt industries like agriculture and construction, potentially leading to higher food and service prices.
How Trump’s Economic Policies Could Shape the U.S. Economy in 2025
Deep Look
The State of the Economy Trump Inherits
President-elect Trump is taking over an economy that, on paper, appears strong. Growth is steady, and unemployment remains low. However, lingering inflation has left many Americans feeling pessimistic.
“Although inflation has come down, the higher price levels continue to weigh on consumer sentiment,” notes Paul Ashworth, chief North America economist at Capital Economics.
Tax Cuts and Fiscal Challenges
Trump’s second term will likely focus on extending the 2017 tax cuts, set to expire in 2025. Ashworth cautions that while this avoids fiscal tightening, it does little to stimulate additional growth.
Meanwhile, the national debt, currently nearing 100% of GDP, could balloon to 120% within a decade. “There’s not much room for new stimulus under these conditions,” Ashworth adds.
Tariffs and Trade Policy
Trump’s trade policies, including proposed tariffs, will likely return as central economic tools. Ashworth predicts a universal 10% tariff and higher levies on Chinese goods.
“These tariffs will feed into consumer goods prices, adding about 1% to inflation,” he says. However, the impact is expected to be a one-time adjustment rather than a persistent rise in inflation.
The Impact of Deportations
Trump’s promise to deport undocumented workers could disrupt critical industries, including agriculture, construction, and food services.
“This policy hits both the supply and demand sides of the economy,” says Ashworth. “While these workers spend money and contribute to demand, their absence will likely affect production more significantly.”
The resulting impact? Slightly inflationary pressure, particularly in food and restaurant prices. Ashworth estimates that combined with tariffs, these policies could shave half a percent off growth while adding 1% to inflation.
The Big Picture
While Trump’s proposed policies may not be catastrophic, they carry significant risks.
“The combination of immigration policies and tariffs could create economic inefficiencies,” Ashworth explains. “It’s not ideal, but it’s far from disastrous.”
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