A Few Economic Facts, A Blast From the Past, and Some Predictions
We've been here before...
Good old Herblock. His cartoon commentary is pretty applicable today, in a twisted way.
In keeping with Trump’s stated intentions, here are some economic facts that show the consequences of those intentions.
Immigration/Deportation:
By one estimate from an immigration policy group, GDP could shrink by $1.1 trillion to $1.7 trillion, but in his recent comments Trump has also said his plan will bring more businesses into the country and the U.S. needs more workers to grow.
https://www.cnbc.com/2024/11/10/trumps-mass-deportation-plan-immigrant-workers-and-economy.html
Tariffs:
The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, amounting to one of the largest tax increases in decades.
The Biden administration has kept most of the Trump administration tariffs in place, and in May 2024, announced tariff hikes on an additional $18 billion of Chinese goods, including semiconductors and electric vehicles, for an additional tax increase of $3.6 billion.
We estimate the Trump-Biden tariffs will reduce long-run GDP by 0.2 percent, the capital stock by 0.1 percent, and employment by 142,000 full-time equivalent jobs.
Altogether, the trade war policies currently in place add up to $79 billion in tariffs based on trade levels at the time of tariff implementation and excluding behavioral and dynamic effects.
Before accounting for behavioral effects, the $79 billion in higher tariffs amounts to an average annual tax increase on US households of $625. Based on actual revenue collections data, trade war tariffs have directly increased tax collections by $200 to $300 annually per US household, on average. Both estimates understate the cost to US households because they do not factor in the lost output, lower incomes, and loss in consumer choice the tariffs have caused.
Trump has proposed significant tariff hikes as part of his presidential campaign; we estimate that if imposed, his proposed tariff increases would hike taxes by another $524 billion annually and shrink GDP by at least 0.8 percent, the capital stock by 0.7 percent, and employment by 684,000 full-time equivalent jobs. Our estimates do not capture the effects of retaliation, nor the additional harms that would stem from starting a global trade war.
https://taxfoundation.org/research/all/federal/tariffs/
Climate change:
According to Morgan Stanley, climate disasters have cost North America $415 billion in the last three years, much of that due to wildfires and hurricanes.
https://news.climate.columbia.edu/2019/06/20/climate-change-economy-impacts/
Tax Cuts:
$8 trillion in tax cuts
Post-Election Analysis: Trump’s Tax Plans and Economic Impact
https://taxfoundation.org/research/all/federal/tariffs/
So what can we forecast as possible outcomes?
It would be prudent to plan for a recession or depression, trade wars, destruction of the rule of law, climate disasters, and cyberwars. Also cultural clashes intensifying machismo vs. women’s rights, and exacerbation of race, class, and entitlement fights. When Jon Stewart and guest start talking about class warfare without mentioning the original theorist Karl Marx, I sense that we’re getting down to the nitty gritty.
It’s probably not going to be pretty.