Facts Over Feelings: Analysis of Trump’s Economic Plan
The 2024 election has been decided. President-elect Donald J. Trump will be inducted into the White House as the 47th President of the United States of America. The Wesleyan campus has been filled with heartache, discontent, and fear about what the next four years under the first felon president will look like. Project 2025, a plan which he has denied a lot despite clear connections to him and newly appointed cabinet holders, outlines pure turmoil in America through mass deportation, expansion of presidential power, enactment of a federal abortion plan, and an end to climate initiatives (Duke 2024). Whether you are feeling outrage at his election, the fact is that people voted for him for a reason: the economy. Exit polls of the 2024 election indicated that 45% of surveyed Americans were doing worse off now than four years ago, and 67% to 32% of voters stated that the economy is worse off (Larry 2024). This is ironic for Trump voters, as much of the 2017 tax plan won't even expire until 2025. In other words, those who believe Trump would be better for the economy may not even realize that much of the economic policy today is his.
But, what actually is Trump's plan for the future term? Trump’s economic plan, which has no formal declaration, can be pieced together from his previous actions in office, promises at rallies, and brazenly bizarre rants on Truth Social. Based on this, the Trump administration's four-year economic plan will likely be defined by tariffs, tax cuts, and deportation. It is important to note that much of what Trump promises, says, and plans does not happen. Trump is the first U.S. President to speak in “truthful hyperbole” as a “basically truthful person” (Trump 1987). So, while these economic plans have been promoted by Trump, they will likely be adapted for better or worse once he enters office on January 21st.
Tariffs
To understand Trump's plan moving forward, it is valuable to examine what he enacted during his previous term in office regarding foreign trade. In 2018, Trump imposed a tariff on imported washing machines (The Wall Street Journal 2024). Tariffs, in this case, were a tax on imported goods used to encourage domestic industries. The effect of this was higher prices on imported washing machines, but also higher prices on those made in the United States. In a video essay released by the Wall Street Journal (WSJ), a WSJ economist explained Trump's 2017 economic plan and what it meant for his next term. The economist explained that Trump’s actions were based on the misconception that “if we tax imports, domestic producers won't change their prices” (The Wall Street Journal 2024). But that was not the case. Not only did the price of washers go up, but so did the price of dryers, a naturally complementary product. It was not all bad, though; these tariffs created around 1,800 jobs as companies like Samsung and LG moved portions of manufacturing back to America. The government brought in $82 million annually from these manufacturing movements back to the U.S. (The Wall Street Journal 2024).
However, these tariffs ultimately made things worse for the average American. The overall consensus on Trump's 2018 tariffs was a loss in total jobs and an increase in costs for consumers. Tariffs are not a short-term effort at economic revival, and the impacts of the 2018 tariffs left the American economy “bleeding,” according to Michael Pettis with Carnegie China (Pettis 2024). In other words, Trump's attempts at protectionist foreign trade policy weakened the American economy as he, specifically in 2018, had “mistaken trade as ideology” (Zakaria 2024). While the initial focus may have been on products like washing machines, tariffs of this magnitude on a broader array of goods could ripple across the economy, driving up costs on everyday necessities from groceries to electronics. This general inflationary pressure could disproportionately impact lower-income households, further squeezing budgets and limiting purchasing power if he follows through with his 2024 economic commitments.
Now in 2024, Trump believes, according to his own website, that foreign countries are abusing current trade relations and wishes to “build America into the manufacturing superpower of the world” (Trump 2024). Using his proposals for this term and actions from his previous term, Trump’s proposal of a 20-60% tariff on goods from foreign countries, if enacted, would not benefit the average American (Lobosco & Luhby 2024). Independent studies show a $46 billion decrease in purchasing power for Americans and an estimated net job loss of 684,000 (Wall Street Journal 2024). While these tariffs may bring manufacturing into the hands of "red-blooded Americans" (cue eagle caw sound effect), and the government will generate greater revenue, the harmful effects on daily consumer behavior are sure to impact Americans profoundly.
Besides the obvious effects on hard-working Americans, these tariffs are worrying for international diplomatic relations. Trump uses tariffs to make a political point; he gets the final word. This behavior could potentially start a new trade war and create a cycle of escalating tensions that could harm both economies. Trump’s proposed 60% tariff on China or planned 200% tariffs on Mexican car manufacturers are not economically motivated but are largely politically motivated to force manufacturers back into America (Oliphant & Shepardson 2024).
These extreme tariffs don't just affect Americans—they affect Chinese and Mexican citizens and would inherently violate World Trade Organization (WTO) guidelines for tariff percentages (Higgs 2024). Trump’s economist disputed plans for tariffs are not ideal for manufacturers and are detrimental to foreign diplomacy. These tarrifs should concern every American already reporting that they are worse off than four years ago as they are predicted to make things worse. Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund, said that the expected tariffs from Trump would be the same as “a grenade thrown in the heart of the system” (Swanson 2024). He further elaborates that his economic policies dismiss all historical trade agreements and would push the U.S. to the forefront of a “global free-for-all” (Swanson 2024). While tariffs on foreign imports will hurt foreign countries, they could hurt American consumers much worse.
Tax Cuts
Trump is approaching taxes like Edward Scissorhands would approach hedges: cut, cut, cut.. This is exactly what he did during his first term with the Tax Cuts and Jobs Act (TCJA), an act that largely aimed to slash corporate taxes (Ross 2024). The TCJA did a lot for education, industries, and small businesses by lowering the corporate income tax (CIT) rate from 35 to 21 percent (Americans For Tax Fairness 2020). But, the TCJA ultimately benefited the already wealthy. Next year, the TCJA will expire, and “households in the top 1% of income distribution will receive an average tax cut of $61,090,” while “those in the lowest quintile will receive, on average, a $70 reduction” (Ross 2024).
Trump's 2024-2028 tax plan mirrors the TCJA, just expanded. The TCJA was not all bad and did provide substantial benefits overall to the American economy. The small business tax deduction included in the TCJA was found by the National Federation of Independent Business to increase employment by 1.2 million jobs a year and increase output by 5% (Tax Foundation 2023). However, his 2024 plan with a reduction of corporate taxes from 21% to 15%, as he has outwardly promised, has severe implications for middle-class Americans (Pettypiece 2024). These cuts will not benefit the struggling middle-class Americans who voted for Trump. Instead, they will likely help the 91 corporations that did not pay federal income taxes under Trump’s presidency in 2016 (Americans For Tax Fairness 2024). On top of that, according to Jon Whiten, the Institute On Taxation and Economic Policy ensures the only group that would truly experience a tax cut would be the richest 1% (Whiten 2024). The fact is this policy will not benefit the middle 20 percent of households, but will do the opposite with an estimated “average $5,900 tax increase” (Duke 2024). If the proposed tariff plans go through, as daily goods and services are already expensive, the proposed tax plan would do nothing to benefit those who are already struggling in today’s economy.
There are, of course, further reductions, cuts, and removals in Trump’s plan. His promised enlargements of the TCJA include an end to tax on tips, a removal of social security payments, and an elimination of taxes on overtime pay (Diamond 2024). All three of these plans do sound helpful for the average American worker, but they are overall unrealistic. If all three are truly enacted, then the trust fund for the social security program would be depleted by 2031, meaning that the program would no longer have sufficient reserves to pay out full benefits. (UPenn Wharton 2024). This would significantly affect retirees, disabled individuals, and younger generations, who are still contributing to the program but expect to benefit in the future, potentially leading to reduced benefits or delays in payments. On November 10th, Fox News host Shannon Bream asked Representative Byron Donalds, a Florida Republican, how Trump and Republicans would tackle the reported $7.5 trillion Trump's plan would add to the nation's debt over the next decade. He responded, saying that “it doesn't take into effect the impact of lower tax rates and economic growth as a result," concluding, "no it doesn't cost 7 trillion dollars" (Taheri 2024). The truth? It likely will. The Committee for a Responsible Federal Budget (CRFB), which correctly estimated the $1.8 trillion deficit of the TCJA, responded to Republican criticism, stating, “Despite some claims that the tax cuts have paid for themselves, actual revenue collections have been relatively consistent with CBO's estimates” (CRFB 2024). The $7.5 trillion debt deficit is likely a consistent value that will come up time and time again, but who am I to say anything when the real solution is “getting rid of Democratic spending boondoggle” (Taheri 2024). Cut, cut, cut.
Deportation
Trump has been explicit about his hateful rhetoric and discriminatory plans for illegal immigrants. Tom Homan, the newly appointed border tzar, stated at a conference this year that “no one’s off the table. If you’re here illegally, you better be looking over your shoulder,” and vowed to “run the biggest deportation force this country has ever seen” (Williams 2024). While these efforts are largely swamped in racism, xenophobia, and fear-mongering, Trump has stated that the mass deportations will help the economy. However, the rhetoric that illegal immigrants are “stealing jobs” is simply untrue (Kilkenny 2011). While the supply of workers has largely fallen back into equilibrium since COVID, the data point has been closely watched. There are an estimated 7 million undocumented workers in America (McKibbin et al. 2024). The worry about mass deportation of this workforce extends from construction to technology. Chad Prinkey, the CEO of Well Built Construction Consulting, said, “We need these workers; what we all want is for them to be documented; we want to know who they are, where they are, and make sure they are paying taxes; we don’t want them gone” (Williams 2024). Janeesa Hollingshead, head of expansion at Uber Works, noted, “The tech industry relies heavily on immigrants to fill highly technical, crucial roles,” reflecting on how tech companies will be forced to search for overlooked workers or face severe labor shortages (Williams 2024). Mass deportation could be just another part of winning over middle-class Americans with the rhetoric that immigrants are stealing jobs, but, if he means what he says, the economy will suffer.
The 47th president looks to solve a lot of American issues by creating more issues. It is hard to say how much of the plan discussed will come to fruition, but if it isn't all hyperboles and blatant lies then America has four tumultuous economic years in front of it. Paul Samuelson, the first economic Nobel prize winner, once joked that, “economics has never been a science—and it is even less now than a few years ago” (The Globalist 2001). The fear and worry that students are feeling today, tomorrow, or next week on campus should be mobilized towards grassroots efforts of analysis, planning, and events. The role that we have as students is as leaders, voices, and activists; for, if Trump's economic plan tells us anything it is to question everything. This is not an economic plan, it is a political one.
References
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