United States: why Donald Trump's promises will trigger rising prices

In recent years, American voters have repeatedly told pollsters and pundits that they are furious about inflation. However, they have just elected a president who will probably cause a surge in prices if he implements two of his main electoral promises: the establishment of generalized customs duties and the mass expulsion of immigrants without permanent legal status. I have previously written about this possible impact of Donald Trump's policies. All this has not changed. But there is one point I haven't emphasized as much as I probably should have: the specific effects of risks on food and housing prices, two issues that have been hot spots in the campaign .

Because the economy is now at full employment, Trump, with his promises of mass expulsion of immigrants, would degrade production capacity, increase deficits and – yes – bring inflation back in force. This is precisely what will happen if he attacks a large part of the agricultural workforce. Immigrants represent about three-quarters, and almost half of them do not have permanent legal status.

Immigrants living in the country illegally also play an important role in food processing. For example, it is estimated that they represent 30 to 50% of workers in the meat industry. If these people are forced out, the food industry will likely have a hard time replacing them. Even in the best-case scenario, the sector will have to offer much higher salaries. And, of course, these salaries will be reflected in prices.

However, downstream of evictions, the economic effects do not only concern food prices, but also the cost of housing. We need to build more. Problem: Immigrants without legal authorization represent more than a fifth of the construction sector's workforce. Their deportation would therefore seriously hamper efforts to increase the supply of housing.

Could we easily compensate for the loss of these workers by replacing them with others, born in the country? No. The employment rate of prime-age adults born in the United States is higher than it has ever been during Donald Trump's first term. There simply aren't a large number of idle but employable native-born Americans to put to work.

In short, if Trump imposes high tariffs and proceeds with his immigrant-hunting plans, a critical portion of the workforce will be decimated and Americans will begin to feel the consequences of inflation. But don't expect Trump to admit he miscalculated. Let's not forget that his campaign was peppered with false claims – on immigration, jobs, inflation, crime and many other subjects.

One of his usual tactics for dismissing data that shows his claims to be false is to insist that the data is not true. So the most likely scenario if inflation rises is that he denies reality or blames bad actors and tries to order another drop in prices. But if you think the president can lower the price of a dozen eggs with a wave of his hand, I have bad news for you: Hungarian Prime Minister Viktor Orban, whom Trump admires, has attempted to suppress inflation by imposing price controls… Which proved to be a dismal failure.

And let's not lose sight of the human component. The prospect of millions of people who came to America to build a better life being rounded up and returned to the borders is appalling. And the cruelty of Trump's proposed deportations is part of the point.

But to the extent that he has made it appear that deporting immigrants without permanent legal status would improve the economic prospects of working and middle-class Americans, this is another case where his rhetoric and calculations fall short. do not agree.

In fact, inflation is far from being my biggest concern at the moment. It is almost insignificant compared to the threat Trump poses to our democracy. The nation's future will largely depend on how its voters react if they discover they wrongly believed in Trump's ability to manage the economy.

© The New York Times 2024