Tariffs and mass expulsions of migrants are expected to weigh on the American economy.
(Boursier.com) — “Customs duties” are, according to his confidences, the favorite expression of Donald Trump, who has just won the American election in the United States. His economic program is affected, since he plans to tax all American imports at 10% and increase duties on Chinese imports to 60%. Much heavier measures than during his first term, when he imposed taxes on around 380 billion dollars of imports.
Donald Trump says these taxes can increase the country’s revenue and reduce its trade deficit, while boosting manufacturing production. And as he demonstrated the last time he was in power, he should take action very quickly – but his inauguration is scheduled for January 20. “I think we’re going to see these policies implemented very quickly and they’ll have an immediate impact,” Mark Zandi, chief economist at Moody’s Analytics, told Bloomberg.
Bullish dollar
Analysts say the policy, if implemented, could trigger a global trade war and threaten European Union exports. It would also cause the dollar, which has already risen sharply in recent hours, to jump to its highest level in four years. “This appreciation of the dollar would make the American economy less competitive, canceling out the expected positive effect of customs duties. Thus, American customs duties would likely lead to a drop in imports but also to a drop in exports from the United States, which should leave the United States’ trade balance relatively unchanged”, estimates the Asterès firm in a note.
Most economists believe these taxes will drive up inflation, with consumers paying higher costs, passed on by importers. Moody’s predicted before the election that with Trump in the White House, inflation would rise by at least 3% next year.
Paradox
Such a scenario would confront the Federal Reserve with paradoxical decisions: raising interest rates to fight inflation, but also cutting rates to prevent the risk of recession, said Jason Furman, the former chief of economic advisers. of the White House during the mandate of Barack Obama. “In economics, there are winners and losers. In this case, the losers are consumers and most businesses,” he said.
Another source of concern is Donald Trump’s threat to deport millions of undocumented migrants. This part of his program, if implemented, would drastically reduce the workforce available to companies struggling to hire. Expelling all migrants who arrived after 2020, as he proposes, would lower U.S. GDP by 3% by the next election in 2028, according to Bloomberg projections.
The impact would be particularly pronounced in sectors like construction, leisure and hospitality, and particularly in states like Texas, Florida and California, where migrants make up the largest share of the workforce.
