Inflation and Tariffs
One of the main concerns for voters is how the president will deal with inflation. Trump has promised to ‘defeat’ inflation in the coming years, yet has also made a firm stand on raising tariffs for imported goods. He proposes a 10% tariff on all goods entering the US, with a 60% tariff for Chinese goods.
Trump has been consistently vocal about the liberal nature of US trade deals and believes that these tariffs can be used as leverage to negotiate more suitable deals. While this may be true, there are still many negative implications.
Trump’s vision is to create more opportunities and encouragement for domestic manufacturing in the US. This will also create more American jobs. He also claimed that the revenues generated by these tariffs can be used to build new infrastructure and allow tax cuts. However, economists expect most of the revenue to be paid by US taxpayers.
This is because foreign companies will not want to absorb the costs and realise a smaller profit, so they will likely pass costs to consumers by raising prices. Raising prices ends up putting inflationary pressure on the US economy.
The UK National Insitute for Social and Economic Research predicted that maintaining these tariffs may lead to a deficit in the US economy by 4%. The US budget deficit will also increase, which is projected to be around 7% of the US gross domestic product, according to the Guardian.
It is also important to note that 77.6% of the US economy is in the services sector. Companies in this sector may struggle due to their reliance on foreign manufactured goods. Importing companies raising prices mean that the services sector must raise prices too.
Immigration
Trump has doubled down on his statement to carry out the ‘largest deportation’ in America’s history. In 2023, there were around 11.7 million undocumented immigrants. While this deportation may free up housing space, give some jobs to US citizens, and strengthen national security, there may be a huge deficit in the labour workforce. There are around 1.5 million illegal workers, which make up 13% of the labour workforce.
This would be consequential for the construction and manufacturing industry, as well as exacerbate house prices. Seeing as the main reason for China’s manufacturing success comes from its cheap, abundant labour supply, Trump’s tariff plans to increase manufacturing in the US may not be fully realised if he reduces the available workforce. The benefits and hindrances of mass deportation are widely contested.
International Conflict
Trump argues that if he is elected to be President, he can end the Ukraine conflict in ’24 hours’. However, some say that this may make Putin even bolder. Trump’s representatives stated that to relieve the conflict, they will send weapons to Ukraine on the condition that Kyiv enters peace talks with Russia.
To persuade Russia even further, the US may further delay Ukraine’s entrance into NATO. Trump says that billions of dollars going to Ukraine aid is contributing massively to the increasing economic pressure on the US, and maybe a solution to problems including their budget deficiency.
He also reportedly pledged to end the conflict in both Gaza and Lebanon but didn’t provide too much detail on the matter. He believes that unlike Biden’s administration, he will put more pressure on Iran (a major weapons supplier to Hezbollah and Hamas) and apply greater sanctions against them.
Trump continues to be a staunch supporter of Israel, not providing many solutions for the Middle-Eastern conflict in which Israel is pressured to pull out, although he continues to say he has the capacity to do so. However, we will never fully know until Trump officially begins his administration.
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