Donald Trump’s economic agenda would turn boom into bust | Editorial

Trump plans to impose tariffs on imported goods, which effectively translates into a national sales tax that will hurt consumers, small businesses, and big corporations.

As Election Day nears, pocketbook issues remain atop voters’ minds. If that is the case, then voter beware: A vote for Donald Trump is a vote against your own economic interests.

In fact, Trump’s economic plan poses a threat to a U.S. economy that is humming along, posting low unemployment, strong job growth, increased wages, record stock market gains, and lowering interest rates, while inflation is back in check.

Trump has proposed a series of fiscal measures that include everything from no tax on tips and Social Security benefits to cuts in the corporate tax rate and extending previous tax cuts that mainly benefit the wealthiest 5%.

The proposed cuts are a cynical ploy to win votes without any consideration as to how they will increase inflation and explode the federal deficit. All the cuts combined would cost an estimated $10.5 trillion over the next decade. That is more than the combined budgets of every domestic federal agency, according to one analysis.

Even worse, the plan to end taxes on Social Security could drain the Social Security Trust Fund in six years, according to the Committee for a Responsible Federal Budget.

Trump’s costly plan to deport millions of migrants would drain hundreds of millions of dollars of revenue from the trust fund since many undocumented immigrants have payroll taxes deducted from their paychecks but are not eligible to collect benefits.

Trump’s other economic plans would spur inflation and raise prices for consumers. For example, Trump wants to devalue the dollar in order to boost exports. But experts said a weak dollar will lead to higher prices and add to inflation.

But the biggest threat to the economy is Trump’s plan to impose tariffs on imported goods, which effectively translates into a national sales tax that will hurt consumers, small businesses, and big corporations. Trump’s tariffs would also roil financial markets and strain international relations.

As with many of Trump’s ideas, the exact details remain a moving target depending on the day of the week. Initially, Trump wanted to impose a 60% tariff on goods from China and a 20% tariff on everything else the United States imports. But he has also threatened to hit Mexico with 100% tariffs. The other day, Trump suggested a 2,000% tariff on cars built in Mexico.

Regardless of the number he settles on, economists agree that tariffs would “reignite” inflation and drive up prices. A 100% tariff on an F-150 imported from Mexico would double the price. Laptop prices would increase by about $350, and other electronics would go up by about 40%.

Higher prices would increase inflation, reduce stock prices, and trigger a trade war with foreign countries. It would also lead to layoffs, as recent history shows. Trump imposed smaller tariffs on China during his previous term. That cost 245,000 jobs, one study found.

Former Treasury Secretary Lawrence Summers called Trump’s policy proposals “irresponsible” and “dangerous,” and said they could lead to mortgage interest rates of 10%.

Trump is undeterred by the dire warnings from economic experts. He has called himself “Tariff Man,” and said tariff is the “world’s most beautiful word.”

Trump claims foreign countries will pay the tariffs, but even the conservative Cato Institute said Americans paid for Trump’s tariffs the last time and will do so again.

Trump claims tariffs will boost U.S. manufacturing and make inflation “vanish completely.” But he has offered no studies to support his claim.

Trump’s jobs plan is even fuzzier.

When a voter in Michigan asked what he would do to keep jobs in America, Trump gave a nonsensical response: “So pretty much as we’ve been saying and what I want to do is that I want to be able to — look, your business — years ago, in this area, I was honored as the man of the year,” Trump said, alluding to an old debunked lie.

Trump acts like the U.S. economy is in a recession when, in fact, it is booming. While prices remain stubbornly high, America has bounced back quicker and stronger than every other developed country.

Inflation has fallen sharply from the 9.1% peak in June 2022. The current inflation rate of 2.4% is close to the Federal Reserve’s target of 2%.

Prices have begun to ease somewhat and are expected to drop further next year. Gas prices have dropped below $3 a gallon at some stations in the Philadelphia area and are the lowest in three years. Grocery prices have fallen and are expected to drop further in the coming year.

Mortgage rates have eased to 6.5% after surging above 8% last year. Rates are expected to drop to around 5.5% next year — unless Trump is elected and starts imposing tariffs.

Republicans blame the spike in inflation on President Joe Biden and the 2021 American Rescue Plan Act, which pumped $1.9 trillion into the economy. While most economists agree that the increased government spending contributed to inflation, it was not the sole cause.

Supply-chain shortages coming out of the pandemic and a spike in oil prices caused by Russia’s 2022 invasion of Ukraine contributed to the jump in prices.

“There’s a long list of reasons for the high inflation,” said Mark Zandi, Moody’s Analytics’ chief economist, with the American Rescue Plan sitting “at the bottom of the list.”

Others argue that corporate price gouging contributed to the jump in prices. The Federal Reserve Bank in Kansas City found that 41% of inflation was due to corporate profiteering, or so-called greedflation.

Despite the price pain, government spending and other policies have strengthened the economy. The recent cover of the Economist declared the U.S. economy is “The envy of the world.” The magazine’s in-depth report said, “The American economy has left other rich countries in the dust.”

The U.S. bounced back faster and stronger than other countries, as GDP grew by 8.2% between the end of 2019 and the end of 2023. That growth rate is nearly twice as fast as Canada’s, three times as fast as the European Union’s, and more than eight times as fast as the United Kingdom’s, according to a separate report in the Atlantic magazine.

“There are many ways to define a good economy. America is in tremendous shape according to just about any of them,” the Atlantic said, pointing to the strong GDP growth, historically low unemployment rate, surging household wealth, and rising wages, “especially for the working class.”

Trump’s economic plans are also riskier than Vice President Kamala Harris’ proposals, as a recent headline in the Wall Street Journal made clear: “Economists say inflation, deficits will be higher under Trump than Harris.”

In fact, 16 Nobel laureates spelled out their concerns surrounding Trump’s threat to the economy in a recent letter.

“We believe that a second Trump term would have a negative impact on the U.S.’s economic standing in the world and a destabilizing effect on the U.S.’s domestic economy,” the Nobel economists wrote.

Trump’s first term was nowhere near as good as he claims, and, in fact, ended with massive job losses and record deficits. A second Trump term is an even bigger threat to the economy.