The president-elect of the United States, Donald Trump, promised during his campaign an ambitious economic project to lower inflation and boost the country’s economy.
Trump, who will take office again starting January 20, would consider the possibility of increasing tariffs on imported products with the aim of boosting national trade, promoting the oil industry and approving new tax cuts.
Regarding tariffs, the Republican’s proposal includes increases of between 10% and 20% on goods entering the country, with even more severe measures for those coming from China, which could see tariffs of up to 60%. In some specific cases, fees could be as high as 200%.
According to Trump, this measure seeks to strengthen “tax collection” and would serve as “a tool of pressure” against nations that, according to him, negatively affect the US economy.
“Until now, in the US there were practically no tariffs and they were only very small and for certain things. The US produces a lot abroad, all of that is imported, not only finished products, but also assemblies, parts and pieces,” explained economist Tulio Rodríguez to the Voice of America.
Direct effect on the economy
The financial expert, a graduate of the Andrés Bello Catholic University of Venezuela and founder of the Kores consulting firm in the US, warned that this decision would have an immediate effect since it would cause a general increase in prices.
It is the same opinion shared by more than 60 American academics who have warned of the consequences that these financial policies would have.
“By the time the tariffs come, the products are already more expensive because whoever is importing to distribute or manufacture necessarily has to pass those prices on to the product or the consumer,” Rodríguez added.
Donald Trump has also promoted a plan against irregular migration in the country and has assured that from the first day of his administration he will order mass deportations of all those who do not have documents to live and work legally in the United States.
Analysts indicate that this would also directly influence the economy, because there is a significant workforce in the country that is undocumented and works in informal economies, with low salaries.
Plan against undocumented immigrants
The number of unauthorized immigrants in the United States workforce has seen a significant increase in recent years. A report from the Pew Research Center concluded that in 2022 this segment of the population increased from 7.4 million people in 2019 to 8.3 million, reaching historic levels not seen since 2008 and 2011.
This figure represents approximately 4.8% of the total workforce in the country, highlighting the “substantial” role that unauthorized immigrants play in the US labor market. The report’s data reflects a growing trend and persistence of these levels of participation amid economic and political changes in the United States.
Furthermore, their role in key sectors, such as construction, agriculture and services, remains crucial for many industries, highlighting the country’s dependence on these workers.
Experts say that if this workforce is eliminated, salaries could increase in many activities. “If this change is 180 degrees and we begin to remove people en masse, that also has an impact since we must remember that this country is purely a country of immigrants,” said Rodríguez.
A likely impact of these measures will be an increase in prices for consumers in the United States, as many companies often pass these costs on to buyers.
Boost to the fossil fuel industry
Another of the anticipated measures is decisive support for the production of fossil fuels. Trump plans to make it easier for the oil and gas sector to access new exploration sites, eliminating incentives for renewable energy and relaxing rules that limit the expansion of these industries.
“He is pro-oil and wants to make sure that people’s pockets improve. That is the approach at the level of bank rates, loans, mortgages, at the level of gasoline, lowering oil prices, also lowering food prices,” commented Gabriela Berrospi, founder of LatinoWallStreet and former director of Hispanic strategy for Robert F. Kennedy. Jr., who ran as an independent presidential candidate and later supported Trump’s candidacy without being part of the Republican Party.
In his opinion, the final objective “is to improve the quality of life of people” and “there is a plan for that, which is to focus on the United States since the current administration has focused a lot on abroad and on giving hundreds of millions of dollars to wars and things like that. He wants to stop that, we are going to focus here, to have the income here,” he added.
The role of the Federal Reserve
The fact that some of these economic measures could increase inflation due to rising prices could also pressure the Federal Reserve to keep interest rates high for an extended period or even consider a further increase in borrowing costs.
There is precisely some uncertainty about what the Federal Reserve is going to do in the midst of this economic context. Its president, Jerome Powell, has assured that the electoral results will have no effect on the political decisions of the economic organization.
“We don’t know when or to what extent the policy changes will occur, so we don’t know what their effects will be on the economy,” he told the media last week.
In other words, the Federal Reserve intends to continue with its plans regardless of what the new White House administration does in economic matters. It ensures that officials make decisions based on data and that politics here do not interfere at all. That the Federal Reserve works as an autonomous entity to provide stability to the economy.
“If the FED can avoid a recession it will be temporary. You cannot avoid a termination forever, for life, never again. But it can be avoided for years, if they go with rate cuts and stimulating the economy,” Berrospi argued.
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