Tag: Trump Economy
Trumponomics Watch: Trump’s Tariffs Are Terrible
“Stock futures fell and oil prices rose Sunday after the U.S. imposed sweeping tariffs on imports from major trading partners, jolting Wall Street’s outlook for the American economy,” the Wall Street Journal reports. “Futures linked to the tech-heavy Nasdaq Composite led the declines, falling by more than 2%, while the S&P 500 slipped by 1.6%. Dow Jones Industrial Average futures slid by about 1.1%, or around 500 points.”
The Dow Jones Industrial Average shed 421 points, or 1%, to 44,123 in early morning trading. The broad-based S&P 500 lost 1.5%, while the tech-heavy Nasdaq composite index tumbled 1.8%.
On Saturday, Mr. Trump signed an executive order that imposes 25% tariffs on imports from Canada and Mexico, while adding an additional 10% levy on goods from China. Hours later, Canada responded with retaliatory tariffs of its own, while Mexico said it was also planning to issue tariffs on the U.S. as well, adding to the potential fallout from a trade war with two of the U.S.’ closest trading partners.
Mr. Trump’s announcement prompted some economists to project that the stiff new tariffs could dampen U.S. economic growth and cause an increase in job losses.
“This development came sooner than we anticipated in our baseline forecast and will lead us to downgrade our 2025 global forecast,” Oxford Economics wrote in a Feb. 3 research note. “The latest set of tariffs will lead to weaker GDP growth, higher unemployment, higher interest rates, and higher inflation this year in Canada, Mexico, and the U.S. than in our January baseline forecast.”
Trump Is NOT Going to Bring Down Grocery Prices
“If you voted for Trump because you thought he was going to bring grocery prices down, I have some very bad news for you.”
— Catherine Rampell, on CNN.
Federal Debt Could Spike Trump’s Big Economic Promises
The Associated Press: Donald Trump has big plans for the economy — and a big debt problem that will be a hurdle to delivering on them.
Trump has bold ideas on tax cuts, tariffs and other programs, but high interest rates and the price of repaying the federal government’s existing debt could limit what he’s able to do.
Not only is the federal debt at roughly $36 trillion, but the spike in inflation after the coronavirus pandemic has pushed up the government’s borrowing costs such that debt service next year will easily exceed spending on national security.
The higher cost of servicing the debt gives Trump less room to maneuver with the federal budget as he seeks income tax cuts. It’s also a political challenge because higher interest rates have made it costlier for many Americans to buy a home or new automobile. And the issue of high costs helped Trump reclaim the presidency in November’s election.
“It’s clear the current amount of debt is putting upward pressure on interest rates, including mortgage rates for instance,” said Shai Akabas, executive director of the economic policy program at the Bipartisan Policy Center. “The cost of housing and groceries is going to be increasingly felt by households in a way that are going to adversely affect our economic prospects in the future.”
