What does Trump’s victory mean for the economy? | economy

With the victory of the US President-elect Donald Trump With a second term, the American economy is preparing for a wave of changes, as the president looks to repeat his economic policies from his first term, but on a larger scale.

According to a report published by the Wall Street Journal, Trump intends to implement Customs tariffs Greater and more comprehensive on imports, with limited targeting of tax cuts.

These steps are expected to put upward pressure on rates Inflation And enhance Growthwhich may increase Impotence It leads to a rise Interest rates.

Tariffs and inflation

According to a Wall Street Journal report, Trump’s first step will be to raise customs tariffs, especially on imports from China, which may reach 60%, while imposing tariffs ranging between 10% and 20% on imports from other countries.

This would raise US tariff rates to levels not seen since the 1930s.

Some economists, such as the Morgan Stanley team, expect the new tariffs to raise US consumer prices by 0.9%, increasing inflation risks.

However, there are some factors that may mitigate the impact of the tariffs, the newspaper report states. For example, importers may bear part of these increases at the expense of their profit margins.

A stronger dollar could also offset higher import prices. According to the Wall Street Journal report, Trump could use tariffs as leverage in trade negotiations, which means the actual increases may be less than what is threatened.

Broad and expensive tax cuts

On the other hand, Trump is seeking to extend some provisions of the 2017 tax law, which is estimated to cost $5 trillion over 10 years, according to the Committee for a Responsible Federal Budget.

Trump’s proposals include additional reductions in corporate taxes and tax exceptions for real estate interest and local taxes, according to the newspaper.

However, this plan faces some challenges, as economists expect it to increase the deficit by $4 trillion over the next decade, putting additional pressure on US Treasury bond yields.

JPMorgan expects that the expected deficit if the tax cuts and tariff increases are extended will raise yields on 10-year Treasury bonds by 0.4%, increasing borrowing costs.

Analyst John Barry estimates that the US Treasury will need to increase the volume of debt issuance to finance the growing deficit, and this may lead to upward pressure on interest rates.

In addition, Trump has pledged to ease regulations in sectors such as the oil industry and mergers, which he believes will boost growth and business confidence.

Although the macroeconomic effects of these measures may be difficult to determine, Trump also seeks to reduce dependence on China in basic industries, which enhances the economic independence of the United States, according to Scott Paul, president of the American Manufacturing Alliance, who said that “these steps may… “It’s expensive, but in some cases it’s worth the sacrifice.”

Does Congress support Trump’s policies?

Despite Trump’s strong orientation towards lowering taxes and increasing tariffs, he faces some challenges with Congress, even from within his own Republican Party, according to the Wall Street Journal, where Don Schneider, a former Republican advisor, confirmed that Congress may not support exceptions such as eliminating taxes on tips and social benefits due to… High costs.

However, Trump has great influence over Republican lawmakers, which increases the likelihood of some of these policies being passed, the newspaper said.

Although the president plays a key role in directing economic policies, the economy’s performance may be affected by other, larger forces, such as unexpected crises or technological developments.

As the author of the report in the Wall Street Journal points out, economic forecasts can change quickly based on global events and internal developments.