Donald Trump Presidency Impact on Economy: Why Inflation Could Rise


  • A Trump presidency is an “inflationary threat” to the US economy, Macquarie said.
  • Trump may implement trade policies that would lessen the US’s dependence on China, and thereby increase prices for American consumers.
  • “This too could give pause to FOMC members as they realize that if real policy rates are to stay structurally high as a result.”

We’ve heard about many factors that could spark a renewed bout of inflation: Red Sea tumult, cash sitting on the sidelines, etc. But what about a Trump win in the 2024 presidential election?

According to analysts at Macquarie, if Donald Trump wins in 2024, it could pose an “inflationary threat” to the US economy.

“The improving prospect that Donald Trump will regain the presidency in the US — the result of his strong performance in the Republican primary elections and the descension of his rivals from the nomination race — may be construed as an inflationary event,” strategists lead by Thierry Wizman wrote.

A big part of that risk has to do with “Trumponomics,” specifically with regards to the former President’s trade policy. Trump quadrupled tariffs on Chinese imports from 3% to 12%. And he has discussed plans to quintuple that to a 60% import tax on all Chinese goods.

Macquarie expects those actions to result in higher consumer prices back stateside. A lot of goods make their way to the US from China, notably clothes, toys, furniture, and even iPhones.

Trump could wean the US off of strategic or essential goods from China, or ban federal contracts for companies that outsource production to China too, which would have the same effect, Wizman said. 

This lurking risk matters because those inflationary pressures could be anticipated by the Fed, which is poised to implement rate cuts this year. The Fed’s January meeting is scheduled this week where chairman Jerome Powell is expected to announce the central bank’s policy stance.

“This too could give pause to FOMC members as they realize that if real policy rates are to stay structurally high as a result, it may not make sense to take a step toward easing just yet,” Wizman said.



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