“Chaos.” “Destructive.” “A big hit to people’s pocketbooks.”
That’s what the economy will look like under a second Trump administration, according to three economists across the policy spectrum, if the GOP presidential candidate enacts the two major policies he’s promising on the campaign trail: huge tariffs and mass deportations.
Americans will face higher prices and product shortages from the tariffs, they say, while consumer spending will suffer and jobs remain unfilled, harming local economies dependent on immigrants.
While they differ on degree, these experts all agree under these policies that the economy will go the same way — in the wrong direction.
‘Empty warehouses and empty shelves’
On the stump, the former president has called for a 60% tariff on Chinese imports along with a blanket 10% to 20% on all remaining goods imported from other countries. This is an escalation of what Trump imposed during his first term, when his tariffs affected some $300 billion in imported goods — some of which Biden has not rolled back — according to Wendy Edelberg, a senior fellow in Economic Studies at the Brookings Institution, a centrist think tank.
“Imagine that happening to 10 times that amount of economic activity,” Edelberg said, noting that equals $3 trillion in imported goods. “What you’re going to see is chaos.”
US companies dependent on imports — and who will bear the cost of the tariffs, per Edelberg — will scramble to negotiate contracts, find other exporters offering lower prices, or try to source the goods stateside — all at the same time. Some will be successful. Many won’t. And Americans may find that some of the goods they want won’t be available.
“What you’re gonna find is, for some period of time, empty warehouses and empty shelves,” Edelberg said.
Read more: What are tariffs, and how do they affect you?
Prices on goods will also rise. That’s not really up for debate, according to these three economists.
Not only will prices on imported goods rise, but also prices on US-made goods will rise if imported materials are used to manufacture those products. US companies will just pass some of that tariff onto shoppers — “a big hit to people’s pocketbooks,” Dean Baker, a senior economist at the liberal-leaning Center for Economic and Policy Research, said.
US companies may also raise their prices even if they’re unaffected by the tariffs.
“When companies are making their pricing decisions, they are looking at what their competitors are doing,” Baker said.
So if the price of imported widgets rises to account for the tariff, then US companies that make widgets here will increase their prices — because they can — just not by as much to stay attractive to consumers by comparison.
The price of services could also rise. Take a hair salon. If many salons use imported hair coloring, but it’s no longer available because of supply chain disruptions, then customers will flock to the one salon that uses hair dye made in the US.
“The hair salon who actually can dye hair may well jack up its prices because they’re now the only game in town,” Edelberg said.
‘Just totally irresponsible’
Overall, inflation would increase a percentage point under the 10% tariffs, Goldman Sachs’ chief economist predicts, and would cost the average American household $2,600 a year, according to The Peterson Institute for International Economics.
“To a family on a limited budget, on limited income [that] is going to be hugely onerous,” said Desmond Lachman, a senior fellow at the conservative-leaning American Enterprise Institute.
And those price increases won’t be evenly distributed. Products most disrupted by the supply chain could see prices jump.
“I can imagine for particular products in particular categories, price spikes on the order of what we saw during COVID,” Edelberg said.
Another ripple effect of imposing these tariffs is the retaliation that the US would face from other countries, which would not sit idly by. For instance, when Trump enacted tariffs in his first term, the affected countries targeted specific US industries with tariffs of their own, including Kentucky bourbon and Harley Davidson.
“This is really a pretty destructive kind of policy,” Lachman said. “It’s just totally irresponsible.”
‘Going to grow less’
Phew. And that’s just the tariffs.
Trump is also calling for deportation of undocumented immigrants to the tune of 10 million to 20 million people. And there’s a lot of confusion as to who is considered illegal. Trump’s vice presidential hopeful, JD Vance, has said that migrants granted legal status under the Biden administration would also be sent back.
Aside from the logistics and massive amounts of money needed to execute deportations — to say nothing of the humanitarian crisis — the policy would kneecap the labor force of many key industries. Immigrants — both documented and not — make up a huge part of the workforce in agriculture, construction, services, and manufacturing.
A sudden shortage of workers makes it harder for companies to produce goods and provide services, a recipe for more inflation.
“If we really did deport something like 30% of our agricultural labor force, there’s no way food prices aren’t going to go up,” Baker said, “and probably quite a bit.”
Edelberg expects many immigrants — even those here legally — would leave voluntarily because the country would be inhospitable. What they all would take with them is millions of dollars in consumer spending.
“Immigrants demand stuff and they supply labor that supplies stuff, and as economies grow those things basically go hand in hand,” she said. “So we can have fewer immigrants. It just means we’re going to grow less.”
Local economies with larger immigrant populations would get hit especially hard by deportations. Imagine, Edelberg said, a local pizza restaurant owner who decided to expand and took out a loan to purchase a new pizza oven.
“And now they’ve expanded, they owe money, they owe more rent, and they have no customers,” she said. “That is so painful for a local economy.”
‘Really rough sledding’
Just how bad would the economy look? The three economists are divided.
Edelberg offered the sunniest of the pessimistic outlooks. Put together, the effects of the tariffs and deportations would “shave off a lot of economic growth,” she said, estimating a decline of 1 to 1.5 percentage points off the country’s gross domestic product.
That, she said, may not be enough to send us into a recession, an outcome that Lachman said is very likely.
“If Trump is elected and if he does what he says he’s going to do,” Lachman said, “it’s going to be really rough sledding for the next four years.”
Former Pennsylvania Sen. Pat Toomey — a Republican — offered a dire warning this month when he told Semafor that Trump’s tariffs would lead to “Depression-era” unemployment. While Lachman thinks that’s too far, Baker is of a different opinion.
“I think that’s a very plausible story,” he said.
“If you create all sorts of instability in the economy by high tariffs, by deporting a large segment of your workforce, and not letting more in, if you cut off the factors that are making your economy flexible, then it’s very hard to get inflation down once it’s started.”
Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on X @JannaHerron.
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