By Yael Tangir, Staff Writer
Donald Trump has once again taken the reins of the world’s leading economy, but this time, it’s under the shadow of what seems like a global crisis. Since the pandemic began in February 2020, consumer prices have jumped by 22.5%, hitting many hard. As the election approached, the economy became a top concern for Americans, with many casting their ballots based on their wallets’ feelings.
The Federal Reserve
The actions of the Federal Reserve largely influence prices in the U.S. The Federal Reserve controls interest rates, money supply, inflation, and bank reserves that affect overall price levels. In a 2024 news conference at Mar-a-Lago, President Trump said, “I made a lot of money, I was very successful and I think I have a better instinct than, in many cases, people that would be on the federal reserve or the chairman.”
While the Federal Reserve was a big topic in Trump’s 2024 campaign, he says he has other tools to help Americans financially. One idea called for leaving about 93 million Americans off the hook for at least a portion of their federal income taxes. Americans received a tax cut during Trump’s first term in 2016 that is set to expire in 2025. To pay for those cuts, congress may have to consider ending the tax-exempt status of municipal bonds or dialing back health care spending. Without cuts, the national debt could rise, and by 2030, the federal debt could amount to over 125% of gross domestic product (GDP), a measure of the country’s economic output.
Tariffs
Trump also called for imposing tariffs ranging from 10-20% on imports coming into the U.S., with even higher tariffs, up to 60-100%, on Chinese goods. Speaking at the Economic Club of Chicago in 2024, Trump said, “The higher the tariff, the more likely it is that the company would come into the U.S. and build a factory here so it doesn’t have to pay the tariff.” According to Trump, these tariffs could potentially generate revenue and bring industrial jobs back to American soil.
At their core, tariffs are simply taxes imposed on goods that cross borders between countries. However, they may have a strong impact, weighing on both small and larger businesses. Trump’s tariff policy could offer strategic benefits for U.S. industries, which may have a positive impact on the country’s economy.
Tariffs can offer significant strategic benefits to the U.S.’s economy, particularly in strengthening domestic industries. By making imported goods more expensive, tariffs encourage consumers to choose products made within the country, helping U.S. businesses stay competitive. This protection can lead to job creation as companies increase production to meet local demand. Additionally, tariffs can reduce the trade deficit by lowering the volume of imports, leading to a more balanced trade relationship, and improving the nation’s economic position on the global stage.
“Excessive Spending” and Oil
During his inaugural speech on January 20, 2025, Trump blamed the current inflation crisis on what he called “massive excessive spending” by Democrats under the previous administration. Trump proposed an increase in oil and gas production as the key solution to tackle rising costs. “We will drill, baby, drill,” he declared, referring to the use of natural resources to lower energy prices. “We’re going to use all the oil that is beneath our feet,” he added, as part of his strategy to boost domestic energy production and lower costs for American consumers.
The U.S. is the world’s leading oil producer, and in 2023, it reached a record high of up to 13.3 million barrels per day in production, far exceeding pre-pandemic levels. This places the U.S. even ahead of Saudi Arabia, Russia, and Venezuela, the countries with the world’s largest proven oil reserves.
Electricity Generation
Trump also declared a national energy emergency aimed at increasing electricity generation, a key component for competing with China in advanced technologies like artificial intelligence, which rely on high-energy data centers. He reiterated his vision of “energy dominance” for the U.S., which he said would ensure national security and reduce costs for consumers.
Illegal Immigration
A central and polarizing issue throughout Trump’s campaign was his promise to tackle illegal immigration. During his first week back in the White House, he initiated the largest deportation program in U.S. history which could have significant economic consequences. Currently, in the U.S., there are an estimated 8.3 million undocumented workers. If Trump follows through on his deportation agenda the agricultural and construction industries will be especially affected, and this may result in a sharp increase in food prices. Additionally, the housing market may experience disruptions as a consequence.
In the U.S., immigration, particularly illegal immigration, remains a deeply controversial topic. To simplify things from a legal standpoint: Entering the U.S. without authorization is a federal crime under Title 8, Section 1325 of the U.S. Code. The penalty for this violation is deportation. If an individual has not been legally admitted to the country, they are not allowed to remain.
Trump’s Inaugural Address
Trump recalled American history as he wrapped off his inaugural address, honoring workers and farmers who helped to establish the nation and the leaders who defeated communism and fascism. He pledged to restore the greatness of the U.S. and rebuild its economy. Through these efforts, he promised, “America will reclaim its rightful place as the greatest, most powerful, most respected nation on earth, inspiring the awe and admiration of the entire world.” He further declared, “We will be a nation like no other, full of compassion, courage, and exceptionalism.” He continued, “Our power will stop all wars and bring a new spirit of unity to a world that has been angry, violent, and totally unpredictable.”
America’s economy under Trump is certainly going to be one for the books.