Former President\u00a0Donald Trump\u00a0is building a second-term economic agenda that analysts say could reheat the very\u00a0inflation\u00a0that he has slammed\u00a0President Joe Biden\u00a0for creating.<\/p>\n
\u201cI call it a ring around the country. We have a ring around the country,\u201d\u00a0Trump\u00a0said in a Time magazine interview released Tuesday, referring to aggressive tariffs he has promised to impose in a second term. \u201cI also don\u2019t believe that the costs will go up that much.\u201d<\/p>\n
The presumptive Republican presidential nominee has repeatedly pledged to hike\u00a0tariffs, cut taxes and encourage cheap money policy if he wins the November election.<\/p>\n
Yet economists and Wall Street analysts agree that these plans would likely drive consumer prices higher.<\/p>\n
Trump has outright dismissed this idea: \u201cI don\u2019t believe it\u2019ll be inflation. I think it\u2019ll be lack of loss for our country,\u201d he said in the Time interview.<\/p>\n
Trump has pledged to raise\u00a0tariffs\u00a0by 10% on imports across the board, and push them even higher \u2014 to between 60% and 100% \u2014 for China and Mexico.<\/p>\n
He also wants to extend his first-term tax cuts, which raised deficits when they were first implemented and are due to expire in 2025.<\/p>\n
\u201cI will make the Trump Cuts permanent \u2026 and we will cut your taxes even more,\u201d Trump said at a February rally in South Carolina.<\/p>\n
Plus, Trump has signaled his intent to replace Federal Reserve Chairman\u00a0Jerome Powell\u00a0and then to pressure the next Fed chair to\u00a0lower interest rates. Trump allies have also been working on plans to force the Fed to consult Trump on interest rate decisions, according to a Wall Street Journal\u00a0report.<\/p>\n
Analysts view these proposals as threats to inflation\u2019s rocky road back down to the commonly accepted ideal level of around 2%.<\/p>\n
\u201cA second Trump term could bring higher tariffs, attempts to weaken the dollar, even higher deficits, deportation of illegal immigrants, and other policies that could put upward pressure on inflation,\u201d Piper Sandler analysts wrote last week.<\/p>\n
\u201cMost of the major policy initiatives being suggested by Donald Trump\u2019s campaign would be inflationary,\u201d Paul Ashworth, Capital Economics\u2019 chief North America economist\u00a0wrote\u00a0Monday. \u201cWhether it\u2019s narrowing the trade deficit via tariffs or a dollar devaluation, curbing immigration or, now we learn, compromising the Fed\u2019s independence.\u201d<\/p>\n
When it comes to tariffs, Wall Street analysts note that businesses pass on higher import costs to their customers by raising prices.<\/p>\n
Trump flatly rejected that idea in the<\/em>\u00a0Time interview. \u201cA lot of people say, \u2018Oh, that\u2019s gonna be a tax on us.\u2019 I don\u2019t believe that. I think it\u2019s a tax on the country that\u2019s [exporting] it.\u201d<\/p>\n Trump\u2019s tariff policies \u201cwould be a significant escalation to existing trade policy, and they would further increase costs for U.S. importers, place upward pressure on inflation and potentially strengthen the U.S. dollar,\u201d Wells Fargo analysts wrote in a report from early April.<\/p>\n But that inflationary impact \u201ccould be partially absorbed in the near term,\u201d the Wells Fargo analysts added, explaining that many suppliers have started to diversify their inventory away from \u201ctariff-exposed product.\u201d<\/p>\n The Trump-era tariffs on China that nearly started a trade war had only a \u201cmarginal\u201d effect on the economy, according to the Wells Fargo report: \u201cThe surge in consumer price inflation is primarily attributed to the pandemic\u2019s disruptions rather than the trade war\u2019s tariffs.\u201d<\/p>\n Reached for comment, the Trump campaign said, \u201cunder President\u00a0Trump, inflation was non-existent, gasoline was cheap, groceries were affordable, and the American Dream was alive and well.\u201d<\/p>\n Despite the inflationary threat posed by core elements of Trump\u2019s agenda,\u00a0polling\u00a0has consistently found that voters trust Trump more than they trust Biden to bring down the cost of living and manage inflation.<\/p>\n In part, voters\u2019 nostalgia for Trump\u2019s economy is a byproduct of the scars that post-pandemic inflation left them with.<\/p>\n In January 2017, when Trump took office, the\u00a0consumer price index, a key inflation metric, hung at an annual rate of 2.51%. That number dipped over the course of his administration, and by the time Biden entered the Oval Office, the 12-month inflation rate was at 1.40%.<\/p>\n By the summer of 2022, year-over-year CPI had soared to roughly 9%, driven primarily by the collision of pent-up consumer demand with a snarled global supply chain that could not deliver products fast enough. CPI has since cooled, to\u00a03.48%\u00a0in March of this year.<\/p>\n But that inflation whiplash over the past five years appears to have left many voters with a bitter memory of the Biden economy.<\/p>\n It has also catapulted a data point that is usually only tracked by economists into the front of voters\u2019 minds, and introduced it to a new generation.<\/p>\n The last time inflation was above 9% was in 1981. The only Americans who were over 18 years old in 1981, and thereby most likely to directly feel the soaring prices, are people who, today, are 61 and above. For everyone else, this kind of inflation has no precedent in their adult lives.<\/p>\n Biden has faced an uphill climb to persuade voters that they are better off thanks to his economic accomplishments, including\u00a0low unemployment, sustained\u00a0GDP growth\u00a0and historic\u00a0clean energy\u00a0investments.<\/p>\n In recent months, Biden\u00a0has also taken a more\u00a0aggressive\u00a0stance on potential trade restrictions on China. Earlier in April,\u00a0Biden\u00a0said he wants to triple\u00a0tariffs\u00a0on imported Chinese steel and aluminum.<\/p>\n But while Biden makes his economic case to voters, Trump has capitalized on the fraught economic data of the past several months to lambast his opponent and the Fed.<\/p>\n \u201cINFLATION is BACK\u2014and RAGING!\u201d Trump wrote in a\u00a0Truth Social\u00a0post earlier in April. \u201cThe Fed will never be able to credibly lower interest rates, because they want to protect the worst President in the history of the Untied States!\u201d<\/p>\n It was unclear what the former president meant by this, especially given that Powell, a lifelong Republican, was appointed by Trump.<\/p>\n<\/p>\n Former President\u00a0Donald Trump\u00a0is building a second-term economic agenda that analysts say could reheat the very\u00a0inflation\u00a0that he has slammed\u00a0President Joe Biden\u00a0for creating. \u201cI call it a ring around the country. We have a ring around the country,\u201d\u00a0Trump\u00a0said in a Time magazine interview released Tuesday, referring to aggressive tariffs he has promised to impose in a second […]<\/p>\n","protected":false},"author":0,"featured_media":3848,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3847","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/3847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=3847"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/3847\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/3848"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=3847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=3847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=3847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}