Summary: Inflation will spike as high as 7% and there will be a $2.5 Trillion hit to the U.S. economy. This earlier summary from the well-respected Peterson Institute for International Economics seems to be tracking right on for what we are seeing. How much would Trump's plans for deportations, tariffs, and the Fed damage the US economy? https://www.piie.com/blogs/realtime...-plans-deportations-tariffs-and-fed-damage-us September 26, 2024 Former president Donald Trump is campaigning for reelection on promises that Americans’ lives would improve greatly if he wins a second term. “Under my plan, incomes will skyrocket, inflation will vanish completely, jobs will come roaring back, and the middle class will prosper like never, ever before,” he told the Republican convention in July. Several of the policies he is promoting, however, would have the opposite effects, according to research detailed in our new PIIE Working Paper, “The International Economic Implications of a Second Trump Presidency,” and summarized here. Among those measures are the deportation of millions of people from the United States, steeper tariffs, and the erosion of the Federal Reserve’s political independence. We find that these steps would result in lower US national income, lower employment, and higher inflation than otherwise. In some cases, economic conditions recover over time, but in others the damage continues through 2040. And despite Trump’s “America first” rhetoric, these policies would harm the US economy more than any other in the world, particularly trade-exposed sectors such as manufacturing and agriculture. In some cases, other countries would enjoy stronger economic growth than otherwise after receiving inflows of capital leaving the United States. Policies Analyzed We chose to analyze three sets of possible future Trump policies because of their potentially significant US and international economic implications: Deporting 1.3 million or 8.3 million unauthorized immigrant workers. Increasing tariffs on all US imports by 10 percentage points and boosting tariffs on US imports from China by 60 percentage points, with or without other countries retaliating by imposing higher tariffs on their imports from the United States. Increasing the president’s influence over the Fed. We examine each policy’s effects separately using an economic model, detailed in our paper, to generate a baseline forecast for different variables in 24 countries and regions if these Trump policies are not adopted. Then, we use the model to project the effects of the policies, measured as deviations from each baseline. The US baseline shows that on average from 2025 to 2040 the country will see annual real GDP growth of 1.9 percent; annual employment growth (measured as hours worked) of 1.5 percent; and an annual inflation rate of 1.9 percent. The US baseline assumes that the 2017 tax cuts enacted in Trump’s first term are extended or that some equivalent Democratic tax package is enacted: Otherwise their scheduled expiration in 2025 would impose a strong fiscal drag that would make the overall US results more negative. Because we assume the tax cuts are extended in both the baseline and counterfactual policy scenarios, the decision has almost no effect on the results when expressed as deviations from baseline. Our online dashboard provides a full set of macroeconomic and sectoral results for all countries. We have no partisan goal in publishing this research. Our concerns are about the policies, not the candidate. Our objective is to educate policymakers and the public about the effects these measures would have on the US and other economies. Combined Policy Effects We also examined two combination scenarios to show what would happen if Trump implemented some of these policies together. In the “low” combination scenario, both the 10 and 60 percentage point increases in tariffs are imposed, foreign countries do not retaliate, 1.3 million workers are deported, and the Fed’s independence is eroded. In the “high” combination scenario, the same tariff increases are enacted, other countries retaliate, 8.3 million workers are deported, and the Fed’s independence is eroded. Both of these scenarios cause a large inflationary impulse and significant declines in US employment, particularly in durable manufacturing and agriculture. They differ mainly by the magnitude of damage inflicted on households, firms, and the overall economy. Using them to create a range of outcomes if Trump’s policies are enacted, we find: US real GDP will be between 2.8 and 9.7 percent lower than baseline by the end of Trump’s four-year term in 2028. GDP recovers a bit thereafter but remains lower through 2040 (figure 1). Employment, measured as hours worked, increases at first but then falls and remains lower through 2040 than otherwise (figure 2). Employment rises between 1.5 and 1.8 percent above baseline in 2025, but it is between 2.7 and 9 percent below baseline by 2028. It stays between 0.4 and 3.4 percent lower by 2040. The US inflation rate climbs to between 4.1 and 7.4 percentage points higher than otherwise by 2026. That means, on top of baseline inflation of 1.9 percent, inflation peaks then at between 6 and 9.3 percent. By 2028, US consumer prices generally are between 20 and 28 percent higher. The inflation rate settles at 2 percentage points above baseline, or almost 4 percent, from 2034 through 2040 (figure 3). *********** Lengthy article with many charts ************* Conclusion Donald Trump portrays the United States as the victim of perfidious foreigners. He proposes to right the scales through policies of mass deportations, trade protection, and influence over the Fed. We find that, on the contrary, these policies over time would leave the US economy generally worse off than if he did not enact them. They would particularly hurt manufacturing and agriculture. Trump often promises to “make the foreigners pay,” but under these measures American households and firms would suffer the most.
I feel there is going to be major major major protests breaking out throughout the country soon.... This is just the beginning of what is going to be a damaging situation that lies ahead....get ready for it because it's going to get nasty
AMAZING ! Never had such good trading days as past 10 days ! And after the crash will trade the ES all the way back up. My long term investments I moved after elections from SPX to the MSCI World index. Wishing everyone else success!
The economic hit is ok, so long as WEF's malignant socialism suffers worse. Also screw the Supreme Court for looking the other way while Biden cheated the election. DOGE should audit every voter roll in the country, that's the third rail of our so called democracy.
@gwb-trading can you do me a favour and ask notagain if it's a bot? I'm convinced it is, and perhaps I'm wrong and it's got me on 'ignore' or something. but its pattern of posting is just too odd.
If we rounded up every illegal Mexican and sent them back the US economy probably would collapse. We need to let in X number of them,a quota if you will to do the low income menial,back-breaking jobs white folks wont do. But once that quota is reached NO MORE!
Actually for the past few years, more Mexicans are leaving the USA than entering. Most of the undocumented immigrants entering the USA across the Mexican border, are not Mexican. https://www.fosterglobal.com/blog/more-mexicans-leaving-us-than-are-arriving/
Look, it's all been a small misunderstanding. He never said everybody's income would skyrocket (his is). Inflation will vanish as soon as they start publishing data according to new "correct" guidelines, you'll see: zero inflation and 5% GDP growth. Jobs are about to come roaring back, soon all those federal employees who have been fired will have the best jobs picking produce and slaughtering hogs. And his last sentence was actually: "and the middle class will never prosper, like... ever". You just don't get his 5-D chess moves
I live in Texas and all I know is what I see with my own two eyes. If we sent all of them back the price of strawberries would instantly quadruple, busboy wages would be $30/hr, and getting a roof put on your house? Well you'll have to take out a second mortgage to pay for that! LOL