Donald Trump made the good health of the American economy a campaign argument in 2020. The theme will remain major this year, with inflation and high interest rates remaining at the heart of Americans’ concerns.
Here are three topics that should be among his economic priorities if he returns to the White House:
Tariffs
“When companies come in and sell their products in the United States, they should automatically pay, say, 10%,” the former president said in August on Fox Business.
The revenue “would be used to repay the debt,” he added, during this interview conducted by his former economic advisor, Larry Kudlow.
Customs tariffs upon entry into the United States are currently 3.4% on average, according to the World Trade Organization (WTO), with disparities depending on products and countries of origin.
It is not clear, however, whether this “universal customs duty of 10%” would replace or add to the existing one.
This “trade war” would be the first “key element” of Donald Trump’s economic policy, explains Marcus Noland, vice-president of the Peterson Institute for International Economics (PIIE), during an interview with AFP.
He worries that this will lead to “further weakening the international trading system” and “further damaging the WTO”.
And, as consumers struggle with inflation, tariff increases could drive up the prices of imported products.
China, mainly, should also remain in the former president’s crosshairs.
“There are a lot of unknowns”, but “Trump seems to have focused on the trade war with China”, underlines Steven Hamilton, professor at George Washington University.
Tax cuts, again
One of the main measures of Donald Trump’s first term was to reduce taxes, for many households and for large businesses. But this reform expires in 2025.
“In my opinion, the economic priority, if he were elected, would be to consolidate this tax reform and build on this foundation,” Richard Stern, a manager at the Heritage Foundation, a conservative think tank, told AFP.
Nevertheless, high interest rates having caused the cost of debt to soar, “there will be a lot of pressure” for the perpetuation of the measure to induce “fewer deficits” than in 2017, he adds.
“I suppose we will arrive at something halfway between what we had in 2016 and what was introduced in 2017,” anticipates Steven Hamilton.
“The centerpieces of Trump’s economic agenda will be trade wars and tax cuts, and he will say that puts money in the pockets of Americans,” summarizes Ben Ritz, an official at the Progressive Policy Institute, a circle of reflection close to the Democrats.
“But in reality, it will only increase our debt, increase the cost of borrowing, increase costs for consumers and probably isolate us from our allies internationally,” he fears.
Haro on green industries
Electric vehicles and solar panels also risk losing their luster with Donald Trump as president.
The Inflation Reduction Act (IRA), passed in the summer of 2022, sends $370 billion to clean energy. This is “probably Biden’s biggest initiative,” notes Steven Hamilton.
And Donald Trump is determined to reduce it as much as possible and to “maximize the production of fossil fuels”, the Republican’s advisers assured the Financial Timesin November.
“This will strangle a thriving green technology industry that the IRA was designed to stimulate,” said Ben Ritz of the Progressive Policy Institute.
“Even if your motivation is to try to fight climate change, the right thing to do is to get rid of the IRA,” defends, on the conservative side, Richard Stern of the Heritage Foundation.
For him, this plan from the Biden government will “waste hundreds of billions of dollars” of public and private money to support “technologies that we already know will not solve the problem”.