Economy is one of the core topics in the 2024 US presidential election. As Donald Trump secures the presidency once again, his economic policies are attracting global attention. Economists are predicting potential economic trends in the United States from three perspectives.
According to various authoritative pre-election surveys, the economy has always been the most concerning issue for Americans. After experiencing struggles such as high inflation, high interest rates, soaring prices, and increasing tax burdens, voters are hoping for significant changes in the US economy.
Following Trump’s victory in the US presidential election on November 5th, the US stock market surged, the Canadian stock market followed suit, and the US dollar strengthened temporarily. William Yu, an economist at the University of California, Los Angeles, predicted in an interview with The Epoch Times NTD that Trump’s three major proposals would increase investors’ confidence in the US economy over the next four years.
Different from the current government’s emphasis on strengthening corporate regulation, Trump advocates for a “Deregulation” policy, planning to revoke many environmental protection regulations to accelerate business development.
“We have seen rapid price increases and severe inflation in recent years, and although it has slowed down now, prices just won’t drop,” Yu believes that the increasing number of regulations in the US has hindered economic growth; therefore, comprehensive deregulation could benefit not only businesses but also bring unexpected advantages to consumers and the working class.
“Deregulation means that businesses can produce goods more easily, reducing the pressure of price hikes, which is very beneficial for the middle class and working class,” Yu said. “Because their incomes are lower, and they must buy necessities, a reduction in price hikes would be very helpful for them.”
The US housing market has long faced a supply-demand imbalance issue. Yu cited an example that if the government reduces regulatory measures on the construction industry, builders can construct new homes more easily, rapidly, and cost-effectively, effectively addressing issues of soaring housing prices and severe shortages.
The second aspect is tax policy. During his campaign, Trump promised to implement a new round of personal and corporate tax cuts. Yu believes that tax cuts can provide substantial momentum for the US economy.
In his first term, Trump signed the 2017 Tax Cuts and Jobs Act, reducing the US corporate tax rate from 35% to 15%. For his second term, he proposed a series of tax reduction measures for individuals, including abolishing taxation on tips for service personnel, overtime pay, and social security benefits. Trump may also continue to cut corporate taxes and even eliminate federal personal income tax.
Yu analyzed that with both houses of Congress currently controlled by the Republican Party, “Trump’s tax cut policy is likely to continue, which will stimulate businesses.”
Trump promised to revitalize the US economy and proposed plans such as imposing a 10% or 20% tariff on all imported goods and a tariff of over 60% on all Chinese goods. Critics argue that this would lead to another round of price increases and worsen inflation.
Yu, however, believes that the public need not be overly pessimistic. Looking at economic data, he pointed out that the main causes of the US inflation and price increases are not attributable to the trade war.
“For example, when tariffs were imposed on China, Trump had already done so in his first term, did it cause inflation? Basically, statistically, it is not visible,” he said. “The main source of US inflation actually comes from services, rental housing, medical insurance premiums, and others, not import products.”
On the other hand, Trump pledged to fully revive America’s manufacturing sector. Yu noted that both Trump and Biden hope to revive US manufacturing, but the Biden administration is hindered by various regulatory measures. “I believe that in his second term, Trump may remove these obstacles, allowing US manufacturing to return, and foreign companies to be willing to invest in the US.”
Reviving the US manufacturing sector can also counterbalance potential upward pressure on prices. Yu holds an optimistic view towards Trump’s current economic policies: after deregulation and tax cuts, increasing tariffs will encourage foreign companies to invest and produce directly in the US, thereby increasing domestic supply and job opportunities. He believes these policies are interconnected and a comprehensive approach can bring balance to the US economy.
Currently, inflation has slowed to 2.4%, and the unemployment rate is at 4.1%. Although Trump has proposed numerous plans to stimulate economic growth, concrete actions need to be taken through Congress. Many people are still adopting a wait-and-see attitude towards the future of the US economy. ◇