The unease plaguing Wall Street regarding the potential return of past President Donald Trump’s populist economic strategies is starkly contrasted by the views of experts, who assert that these very policies could in fact present substantial gains for the everyday American.
There’s an expanding belief within Wall Street circles that Trump may reclaim his presidency, in light of recent less-than-stellar performances by President Joe Biden in his political debates, as per a Politico report. Amidst these speculations, concerns surface about former President Trump’s immigration and trade actions, which, while potentially posing risk to overall economic progress, may also redirect significant benefits to average U.S. workers grappling with the aftermath of rampant, unauthorized immigration and disadvantageous trade strategies.
Trump’s tenure and campaign strategies hinged strongly on key populist principles that emphasized trade protectionism and the promotion of American manufacturing. This aligns seamlessly with the immigration policy Trump anticipates implementing should he return to office, as he ardently committed to undertake the most extensive domestic mass removal during a campaign speech in Iowa last December. ‘The current administration under Biden has abruptly ceased enforcing boundary regulations, thereby instigating an influx of illegal migrants into our country,’ stated Michael Faulkender, Chief Economist at the America First Policy Institute.
‘These unauthorized immigrants are being granted employment permits, which is why left-leaning entities claim Trump’s policies would stimulate inflation. It derives from the assumption that if such immigrants are expelled, there wouldn’t be enough labor force to fulfill existing work,’ Faulkender further elaborated. Statistics from the past year reveal that the number of employed immigrants escalated by over 600,000, reaching almost 31 million, while employment of U.S.-born workers declined by nearly 300,000. This discrepancy underscores that under Biden, the advantages seem to favor foreign-born workforce as opposed to U.S.-born employees.
As per E.J. Antoni, Public Finance Economist at the Heritage Foundation, Trump’s immigration strategy during his potential second term would mean ‘the typical American wouldn’t face competition from exceedingly cheap labor, which currently is lowering living standards.’ He further emphasizes that this would mean companies would be more willing to compensate their employees with substantial living wages. Antoni believes that this exact reason led to sharp wage growth for many manual labor jobs during Trump’s inaugural term. These roles saw significant wage increases, owing to policies that curbed the inflow of illegal immigrants. This reduction ensured the labor market remained buoyant, especially for American citizens.
A defining characteristic of Donald Trump’s economic policy was trade protectionism. This involved the introduction of import tariffs, particularly from competing nations such as China, and a firm emphasis on boosting American manufacturing. As Faulkender pointed out, the significant application of tariffs by Trump during his first term beautifully contradicts leftist fears of inflated prices. ‘Throughout his presidency, the inflation rate remained below 2%. If imposing tariffs on the level that Trump had suggested was as inflation-inducing as the Democratic party would have you believe, where then was the inflation during his presidential term?’
However, Peter Earle, Senior Economist with the American Institute for Economic Research, offers a contrarian perspective on the effectiveness of tariffs. He posits that these trade policies tend to place a burden on American enterprises and consumers as they propel cost increases due to inflation. ‘At the current moment, considering the active disinflation, it’s improbable that higher inflation rates in future years can be attributed to monetary policy. Instead, it’s more plausible that the concern arises from Trump’s future tariff promises which lead to higher yields on long-term debts. Tariffs elevate the costs of imported goods and if applied across a broad spectrum of goods can induce a surge in the overall prices of goods and services,’ remarked Earle.
Undeniably, Trump’s recent push for a 60% tariff hike could have calamitous consequences on international commerce, going beyond merely the U.S. and China. A rise in business costs, like those for imported production inputs, inevitably leads to a surge in consumer prices, in Earle’s view. Yet there are economists like Faulkender who fervently insist that Trump’s expositional economic and trade policies are in reality beneficial for Americans across the spectrum.
A key element in Faulkender’s support for a second Trump term is his belief that the era of Trump was highly advantageous for ordinary Americans and the working class, and was also gratifying to investors. ‘Observing the stock market’s record during Trump’s administration, it performed remarkably well. I vehemently challenge this left-derived analysis purporting that economic prosperity is a zero-sum game, where a win for the worker implies a loss for the investor. With the correct policy framework, we can enhance outcomes for both investor and laborer. This was Trump’s track record, and I anticipate this will be his approach should a second term materialize.’