After a resounding victory in the 2024 election, Donald Trump is preparing to enter his second presidential term with a series of bold economic and foreign policies. From corporate tax cuts and comprehensive import tariffs to plans for reducing energy costs and redefining U.S. engagement with international organizations, his vision for America sparks both high hopes and heated debates. These decisions are poised not only to reshape the U.S. economy but also to have far-reaching global implications, raising critical questions about their feasibility and long-term impact.
1. Comprehensive Import Tariffs
President-elect Donald Trump has proposed implementing comprehensive import tariffs ranging from 10%-20% on all imported goods, with a maximum of 60% on imports from China. Additionally, he has warned of imposing a 25% tariff on all products exported from Mexico and Canada to the United States, effective immediately upon his inauguration. This policy aims to protect American jobs and industries, encourage domestic production, and reduce dependence on foreign goods.
However, many economists, including Harvard University’s Professor Robert Lawrence, argue that tariffs could lead to increased prices for imported goods as well as their domestic substitutes, burdening American consumers. A report by the Peterson Institute for International Economics predicts that if implemented, these policies could drive inflation to 6%-9.3% by 2026, compared to a baseline rate of 1.9%. This inflationary pressure could result in each American household incurring additional costs ranging from $2,600 to $7,600 annually, with essential goods being disproportionately affected.
2. Expansion of Trump’s 2017 Tax Cuts
In an effort to bolster the U.S. economy, Donald Trump has proposed reducing the corporate tax rate from 21% to 15%, continuing the tax cut policies from his first term. He emphasized that a lower tax rate would make the U.S. more attractive to international investors while enabling domestic businesses, particularly small enterprises, to thrive. According to Trump, this strategy is pivotal for fostering economic growth and creating jobs. Reducing the corporate tax rate to 15% could position the U.S. as one of the most tax-competitive nations, drawing foreign companies while directly benefiting small businesses, which serve as the backbone of the economy. A report from the Tax Foundation indicates that this policy could slightly increase after-tax incomes, thereby stimulating consumer spending and investment.
However, critics warn that the policy might exacerbate income inequality, as the wealthiest groups are likely to reap disproportionate benefits. Additionally, it could add an estimated $5.8 trillion to the national debt over the next decade. Trump’s suggestion to fund the policy through tariffs has raised concerns about its feasibility and the potential strain on public finances. While the policy promises to enhance the competitiveness of American businesses, it raises significant questions about sustainability, as the risks of growing inequality and mounting national debt could overshadow its immediate advantages.
3. Trump and the Promise to Lower Housing Costs Through Large-Scale Deportation Program
Donald Trump and vice-presidential candidate J.D. Vance have pledged to implement the largest deportation program in U.S. history, claiming that this move would reduce housing costs and increase wages for domestic workers. Vance argued that undocumented immigrants are driving up housing prices by competing with Americans for limited housing. However, economists have pointed out that there is no clear evidence of a causal link between undocumented immigrants and housing affordability.
While Trump believes that reducing immigrant labor will lead to lower prices for goods and services, experts caution that industries heavily reliant on immigrant labor—such as agriculture, construction, and services—could face severe labor shortages, ultimately driving production costs higher. Additionally, the Peterson Institute for International Economics has projected that such a program could shrink U.S. GDP, while the American Immigration Council estimates the cost of deporting 11 million undocumented immigrants to be around $315 billion. This enormous expense could place significant pressure on the national budget, raising doubts about the program's feasibility and economic impact.
4. Trump’s Pledge to Halve Energy Costs
Donald Trump has promised to cut Americans’ energy costs by half within a year of taking office, positioning this as a cornerstone of his plan to curb inflation and stimulate the economy. His strategy includes expanding oil and gas production, easing regulatory barriers for constructing energy plants, and declaring a national emergency to boost domestic supply. Trump’s goal is to bring gasoline prices below $2 per gallon.
While this plan could lower energy prices, many economists caution that the president has limited control over oil production, as global markets and geopolitical factors play a significant role in determining prices. Despite the U.S. achieving record levels of crude oil production, the potential for further domestic increases is constrained. Energy prices have a substantial impact on overall costs, particularly in agriculture, where fuel is a significant expense. Carl Schramm, an economics professor at Syracuse University, suggests that lower energy costs could reduce the prices of food and other goods, aiding inflation control.
However, implementing this plan faces significant hurdles. Global oil prices remain difficult to manage, and declaring a national emergency to boost energy production could provoke legal challenges and raise environmental concerns. These factors cast doubt on the feasibility and long-term efficacy of Trump’s promise.
While Trump’s commitment offers hope for reducing energy costs and controlling inflation, its success hinges on factors beyond government control. If achieved, it would mark a significant improvement in Americans' quality of life. However, the associated risks and uncertainties remain formidable obstacles for Trump to overcome.
5. Donald Trump’s Foreign Policy
In his victory speech, Donald Trump pledged to end all ongoing wars worldwide, raising international curiosity about his approach to major conflict zones such as Ukraine and the Middle East. Trump has repeatedly claimed he could end the Ukraine conflict within 24 hours by bringing both sides' leaders to the negotiation table, although he has not elaborated on how he would achieve this.
In the Middle East, Trump has expressed strong support for Israel in its conflict with Hamas in Gaza but has also urged Tel Aviv to agree to a ceasefire. According to Reuters, Trump is likely to continue the Biden administration's policy of supplying arms to Israel while pursuing efforts to normalize relations between Israel and Saudi Arabia—a goal he advanced during his previous presidency. Simultaneously, Trump is expected to intensify pressure on Iran and Tehran-aligned militias in the region.
Significant shifts in U.S. foreign policy are anticipated under Trump, as he has vowed to withdraw from the Paris Agreement once again, reversing the Biden administration’s decision to rejoin it. He may also curtail U.S. cooperation with United Nations agencies, such as the World Health Organization (WHO), which his administration has previously criticized.
With NATO, the risk of drastic changes appears limited since the alliance's charter lacks a withdrawal mechanism, and Congress recently passed legislation safeguarding U.S. membership. However, Trump could still exert pressure on member nations regarding shared defense expenditures and contributions to military support for Ukraine. Similar demands for increased burden-sharing could also impact U.S. allies in Asia, particularly South Korea and Japan.
Trump’s foreign policy promises a mix of assertive actions and retrenchment, with significant implications for global stability and U.S. alliances. However, many details of his approach remain unclear, leaving room for speculation about its execution and impact.
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