TLDR:
- Trump proposes 60% tariff on Chinese imports and 10-20% on all other imports
- Economists predict higher prices, product shortages, and economic chaos
- Mass deportations could lead to labor shortages in key industries
- Local economies with large immigrant populations would be hit hard
- Estimates of economic impact range from slowed growth to potential depression-era unemployment
Former President Donald Trump’s proposed economic policies for a potential second term have drawn attention from economists across the political spectrum.
These plans, centered on imposing significant tariffs and implementing mass deportations, are raising concerns about their potential impact on the U.S. economy.
Trump has called for a 60% tariff on Chinese imports and a 10% to 20% tariff on all other imported goods. This marks an escalation from his first term, when tariffs affected about $300 billion in imported goods.
Wendy Edelberg, a senior fellow at the Brookings Institution, suggests that the new proposal could impact up to $3 trillion in imported goods, potentially leading to “chaos” in the economy.
Economists predict that these tariffs could result in higher prices for consumers and potential product shortages. U.S. companies dependent on imports would likely bear the initial cost of the tariffs, but many would pass these expenses on to consumers. Dean Baker, a senior economist at the Center for Economic and Policy Research, describes this as “a big hit to people’s pocketbooks.”
The impact of these tariffs could extend beyond imported goods. Prices of U.S.-made products using imported materials could also rise.
Even services might see price increases if they rely on imported goods that become scarce or more expensive.
Goldman Sachs’ chief economist predicts that the 10% tariffs alone could increase inflation by one percentage point.
Another key aspect of Trump’s economic plan involves the mass deportation of undocumented immigrants, potentially affecting 10 to 20 million people. This policy raises concerns about labor shortages in industries heavily reliant on immigrant workers, such as agriculture, construction, services, and manufacturing.
Economists warn that sudden labor shortages could make it harder for companies to produce goods and provide services, potentially fueling further inflation. Baker notes that deporting a significant portion of the agricultural workforce could lead to substantial increases in food prices.
The proposed deportations could also impact consumer spending, as immigrants contribute significantly to local economies. Edelberg suggests that even legal immigrants might leave voluntarily if the country becomes inhospitable, further reducing consumer demand and economic growth.
Local economies with larger immigrant populations are expected to be particularly affected. Businesses that have expanded based on current population levels might struggle with reduced customer bases and ongoing financial obligations.
The overall economic impact of these policies is a subject of debate among economists. Estimates range from a reduction in economic growth of 1 to 1.5 percentage points, as suggested by Edelberg, to more severe predictions. Lachman anticipates a likely recession, while Baker considers former Pennsylvania Sen. Pat Toomey’s warning of “Depression-era” unemployment as a “very plausible story.”
These economic predictions are based on the assumption that Trump would fully implement his proposed policies if elected.
The actual impact would depend on various factors, including the extent of policy implementation and potential reactions from other countries.
