With the 2024 presidential election heating up, it’s important to take a look at the policies and promises former President Donald Trump has made during his campaign. From tariffs and tax cuts to inflationary pressures, his policies are likely to shake up the nation’s economy. And while his economic promises may seem far from affecting your daily expenses, financial experts warn otherwise.
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We spoke to David Kass, clinical professor of finance at the University of Maryland Robert H. Smith School of Business, to get his perspective on Trump’s economic policies. Kass explained why Trump’s initiatives could impact Americans’ spending, and what a re-election will mean for the broader economy and the prices you pay at big retailers.
Read on to find out how a Trump win in November might affect your shopping expenses.
Stricter Tariffs
Kass expects that Trump will push for stricter tariffs if re-elected. Not only will this aggressive trade move make a big impact on inflation, but it will also have a significant effect on America’s finances as a result.
“If Donald Trump is elected to a second term, his policies are very likely to rekindle inflation,” Kass said. “His proposed 60% tariff on imports from China and 10% from everywhere else are estimated by Deutsche Bank to raise consumer prices by 1.4% to 1.7%. Retailers that rely heavily on imports, such as Walmart and Amazon, would face higher costs which would likely be passed on to consumers.”
With major retailers facing higher import fees, the prices of goods are likely to rise, leading to rekindled inflation and budgetary strain on everyday necessities.
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Immigration Policies
Trumps “America First” policies could also lead to changes in the labor market. While aimed at opening up more jobs for American citizens, these policies are likely to result in higher prices for consumers as a result.
“Trump’s immigration policy would reduce the availability of low-cost labor, which would increase labor costs for retailers such as Costco and Home Depot that have a large workforce,” Kass said. “These higher costs would likely be reflected in higher prices to consumers.”
With major retailers like Costco and Home Depot having less access to lower-wage workers, they will face higher wages for their workforce. Ultimately, consumers will feel the strain of this shift in the labor force through the increased costs of their shopping bills.
Tax Cut Extensions
While Trump’s promise to extend the Tax Cuts and Jobs Act of 2017 might sound appealing, if the law he signed as president becomes permanent, there are potential drawbacks.
According to Kass, these extended tax cuts, along with the elimination of taxes on tips and Social Security benefits, could widen the budget deficit, with projections to add $1.891 trillion to the national debt over 10 years. And as history has shown, this move is likely to be followed by rising inflation.
Although Trump’s policies are aimed at improving the nation’s economy, they are likely to lead to higher prices on everyday goods — from bananas to microwaves — putting a strain on the wallets of everyday Americans.
Increased Pressure on the Federal Reserve
Speaking of inflation, Kass believes that Trump will increase pressure on the Federal Reserve as he strives to keep interest rates low during his potential second term.
“Trump has also indicated that he would exert pressure on the Federal Reserve to lower interest rates below levels that the Federal Open Market Committee might otherwise set,” Kass said. “This stimulative monetary policy would add to inflationary pressure.”
Despite the threat of high inflation, Trump has also proposed measures to reduce the federal deficit. However, Kass points out that the benefits of this initiative are likely to be marginal.
“Trump has promised that he would reduce the Federal deficit by eliminating fraud, waste and abuse, and move the functions of the Department of Education to the states,” Kass said. “However, neither during his first term as president nor any previous Democratic or Republican administration, has there been a substantial reduction in this regard. The proposal to eliminate the Department of Education would not result in significant savings.”
Increased Costs Will Hit Low-Income Families the Hardest
According to Kass, the bottom line is that Trump’s economic policies are likely to result in high inflation, making your weekly Walmart, Target or Costco trip more expensive. While his policies would affect the entire economy, some Americans are more vulnerable to the changes than others.
“If Trump is elected in 2024, his policies are very likely to increase costs for both major retailers and small businesses,” Kass said. “Since lower and middle-income families spend a much higher percentage of their income at retailers than do those with higher incomes, they would be the demographic group that would be most adversely affected. With the likely increase in inflation, lower and middle-class consumers will be forced to have to cut back on their consumption.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m an Economist: How Trump Winning Could Impact Prices at Big Retailers
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