Dubai Telegraph - Low taxes, high tariffs: What a Trump victory means for the US economy

EUR -
AED 3.849459
AFN 71.267446
ALL 97.489194
AMD 407.131662
ANG 1.888724
AOA 957.395732
ARS 1052.23996
AUD 1.608928
AWG 1.889106
AZN 1.778344
BAM 1.94835
BBD 2.115818
BDT 125.236374
BGN 1.954483
BHD 0.394975
BIF 3036.718353
BMD 1.048048
BND 1.408315
BOB 7.241313
BRL 6.09607
BSD 1.047898
BTN 88.544945
BWP 14.307296
BYN 3.429786
BYR 20541.735881
BZD 2.112523
CAD 1.463185
CDF 3007.896896
CHF 0.929362
CLF 0.036978
CLP 1020.337634
CNY 7.58493
CNH 7.60312
COP 4601.977666
CRC 532.714856
CUC 1.048048
CUP 27.773265
CVE 110.700038
CZK 25.368204
DJF 186.258433
DKK 7.459213
DOP 63.305535
DZD 140.00766
EGP 52.060203
ERN 15.720716
ETB 129.012117
FJD 2.380379
FKP 0.827242
GBP 0.832233
GEL 2.855918
GGP 0.827242
GHS 16.611978
GIP 0.827242
GMD 74.41137
GNF 9044.651585
GTQ 8.090067
GYD 219.261645
HKD 8.157359
HNL 26.384543
HRK 7.475996
HTG 137.593904
HUF 411.299528
IDR 16692.832925
ILS 3.893576
IMP 0.827242
INR 88.571355
IQD 1373.466575
IRR 44128.050457
ISK 146.100754
JEP 0.827242
JMD 166.433635
JOD 0.743174
JPY 162.013521
KES 135.723264
KGS 90.648567
KHR 4244.593516
KMF 489.959968
KPW 943.242577
KRW 1467.528958
KWD 0.322411
KYD 0.873361
KZT 519.70306
LAK 23009.888592
LBP 93905.078447
LKR 304.924111
LRD 189.120651
LSL 18.979788
LTL 3.094612
LVL 0.633954
LYD 5.119731
MAD 10.475264
MDL 19.084031
MGA 4894.383123
MKD 61.499953
MMK 3404.018207
MNT 3561.266195
MOP 8.401216
MRU 41.822309
MUR 48.632961
MVR 16.203073
MWK 1818.362584
MXN 21.399862
MYR 4.679553
MZN 67.022637
NAD 18.97998
NGN 1768.213504
NIO 38.557204
NOK 11.607569
NPR 141.67231
NZD 1.787898
OMR 0.4035
PAB 1.047993
PEN 3.977374
PGK 4.219178
PHP 61.802851
PKR 291.409517
PLN 4.343765
PYG 8225.236565
QAR 3.81568
RON 4.976446
RSD 116.993815
RUB 106.1678
RWF 1435.825416
SAR 3.934914
SBD 8.756995
SCR 14.316445
SDG 630.380512
SEK 11.596769
SGD 1.410704
SHP 0.827242
SLE 23.659663
SLL 21977.042238
SOS 598.917452
SRD 37.106106
STD 21692.472405
SVC 9.169938
SYP 2633.251262
SZL 18.980071
THB 36.391332
TJS 11.161424
TMT 3.668167
TND 3.317061
TOP 2.454635
TRY 36.149672
TTD 7.1138
TWD 34.1281
TZS 2779.798908
UAH 43.266431
UGX 3872.047297
USD 1.048048
UYU 44.65797
UZS 13498.85466
VES 48.210488
VND 26643.9939
VUV 124.426335
WST 2.925721
XAF 653.458476
XAG 0.033959
XAU 0.000393
XCD 2.832401
XDR 0.799443
XOF 649.260344
XPF 119.331742
YER 261.933367
ZAR 18.957858
ZMK 9433.687606
ZMW 28.899502
ZWL 337.470948
  • CMSC

    0.0700

    24.59

    +0.28%

  • RBGPF

    -0.5000

    59.69

    -0.84%

  • CMSD

    0.1300

    24.39

    +0.53%

  • BCC

    2.3700

    139.78

    +1.7%

  • SCS

    0.1550

    13.225

    +1.17%

  • NGG

    -0.2400

    63.03

    -0.38%

  • BCE

    -0.4050

    26.595

    -1.52%

  • RIO

    0.1000

    62.49

    +0.16%

  • JRI

    0.0050

    13.235

    +0.04%

  • RYCEF

    0.1800

    6.79

    +2.65%

  • GSK

    0.2810

    33.631

    +0.84%

  • RELX

    0.5450

    45.655

    +1.19%

  • BP

    0.3050

    29.385

    +1.04%

  • AZN

    0.7000

    63.9

    +1.1%

  • VOD

    -0.1000

    8.84

    -1.13%

  • BTI

    -0.1250

    36.955

    -0.34%

Low taxes, high tariffs: What a Trump victory means for the US economy
Low taxes, high tariffs: What a Trump victory means for the US economy / Photo: CHANDAN KHANNA - AFP

Low taxes, high tariffs: What a Trump victory means for the US economy

Donald Trump's victory in the 2024 US presidential election is likely to usher in a raft of economic changes at home and abroad, touching everything from foreign trade to the independence of the US central bank.

Text size:

He will reap the benefits of an economy that is in good shape, with strong growth, low unemployment, and inflation that is rapidly approaching the Federal Reserve's long-term two percent target after years of higher interest rates.

Yet his victory came as voters have expressed dissatisfaction with the cost of living as a result of a post-pandemic surge in inflation that pushed consumer prices up by more than 20 percent.

While many of the incoming Republican president's proposals will ultimately live or die in Congress -- which controls the purse strings of the world's largest economy -- there is still a significant amount he can do to shape economic policy.

- Tariffs and trade -

On the campaign trail, Trump said he would put in place across-the-board import tariffs of between 10 and 20 percent in a bid to raise revenues, protect domestic industries, and bring jobs back to the United States.

He has also threatened to impose a 60 percent tariff on Chinese goods, and even floated a 200 percent-plus levy on cars made in Mexico.

"To me 'tariff' is a very beautiful word," he said in a recent Fox News interview. "It's a word that's going to make our country rich again."

Trump "has made no mystery of the fact that he's deeply enamored with tariffs as a policy tool," Kimberly Clausing, a nonresident senior fellow at the Peterson Institute for International Economics (PIIE) told AFP on Tuesday, adding she thought he would put in place large tariffs if elected.

If enacted, these policies will undoubtedly have a significant impact on US and international trade, rerouting the flow of goods and reshaping international economic ties.

But while they may raise some revenues, they will also hit US businesses and consumers hard, according to a recent paper by the Tax Foundation nonprofit.

If imposed, Trump's proposed tariff increases would raise taxes on businesses by another $524 billion annually, shrink GDP by at least 0.8 percent, and reduce employment by close to 700,000 full-time equivalent jobs, the researchers estimated.

"I think it's just sort of a very quick way to shoot the US economy in the foot, if not the leg," said Clausing, a former deputy assistant secretary for Tax Analysis in the US Treasury Department during the Biden Administration.

- Inflation and the Fed -

Alongside his tariff plans, Trump has also indicated that he would like "at least" a say over interest rates -- which are currently set by the independent US central bank -- and suggested he would look to deport millions of undocumented workers.

Economists at PIIE recently estimated that the combined effect of Trump's plans for higher tariffs, mass deportation of undocumented workers, and greater control over Fed policy would slash US economic output by between 2.8 and 9.7 percent in real terms by the end of his term in 2028.

Employment would also be hit, according to PIIE's analysis, and inflation could reignite, peaking at 9.3 percent in 2026 in a worst-case scenario -- above the four-decade high it reached in 2022.

- Taxes -

The nonpartisan Committee for a Responsible Federal Budget (CRFB) estimates that Trump's economic agenda could increase the national debt by as much as $15 trillion over a decade -- almost twice as much as Kamala Harris's plans would have done in a worst-case scenario.

A significant chunk of the additional costs come from Trump's proposals to extend his tax cuts from 2017, which are set to expire next year.

But extending the Trump tax cuts would rely on Congressional support, where overall control of the House remains uncertain. Democrats have indicated that there are many parts of these plans they would not want to renew if they win back the House.

Overall, many of Trump's policies could end up hurting some of the poorest in society, Margot Crandall-Hollick, principal research associate at the Urban-Brookings Tax Policy Center, told AFP.

"I think a Trump presidency would probably provide pretty limited, if any, benefits for low income folks," she said.

"And if you add the tariffs, which are going to increase the cost of goods that everyday people use, it would be a net negative for most low and moderate income folks," she added.

H.Nadeem--DT