Trump's return would be a shock for the economy
After his re-election, Donald Trump intends to make more than just a radical policy shift: total isolationism extern, extreme deregulation of the US economy internally. Highly regarded economists speak of another potentially disastrous round of "Russian Roulettes".
It's official now: Donald Trump is the Republican presidential candidate. Although there was hardly any doubt about his nomination before, it adds a little more certainty for many voters, his opponents, and experts about his plans for a second term.
Many observers are alarmed not only by Trump's declared goals, such as ending US support in the Ukrainian war, delivering NATO allies to Russia, deporting millions of immigrants, using tax and justice departments to persecute his enemies, and turning the US government into a loyalist administration for his politics and into an authoritarian regime. Economically, Trump and his team have ideas that could cause significant damage to the world economy.
Economists are particularly concerned about Trump's debt binge. In his first term, the multiple bankruptcy filer made an estimated $3.9 trillion in new debt according to a US think tank, which is about 11% of the current US total debt of around $35 trillion. Most of this went towards Trump's massive tax cuts for the rich and corporations, which are set to expire in 2025. If Trump extends them, it's likely that another $3.9 trillion in new debt would be added.
Economic Roulette for the World Economy
The US would be heading towards a potential debt crisis under a possible new Trump administration. The US already has more than 120% of its economic output in debt. It's also unclear whether the economic benefit would really be in proportion to the costs. According to US economists, the tax cuts in Trump's first term led to more investments and slightly higher wages but generated much less growth than expected - at a huge cost.
"Some may say that we have managed to survive an administration by Trump and therefore probably will again," warn former Treasury Secretary Robert Rubin and former American Express CEO Kenneth Chenault in the "New York Times". "A more appropriate analogy is that we have survived one round of Russian Roulette in the economy, and Donald Trump now wants us to spin the cylinder again - but this time with much more bullets in the chamber."
In the medium term, investors and the middle class are likely to bear the brunt of Trump's spending explosion, which could lead to higher interest rates, rising inflation, and less growth. Investment bank Goldman Sachs sees "far-reaching consequences" for Europe and estimates that a second Trump administration could cost the EU around 1% of growth.
The Trade War Threatens to Escalate
With great certainty, Trump is likely to launch new economic attacks on the EU and China. In his first term, Trump mainly targeted Beijing, imposed tariffs on steel producers in Europe, and even turned washing machines into a battleground in the trade dispute.
In a second term, Trump now threatens the whole world with all-out trade war: Tariffs of ten percent on all imports into the USA, no matter the origin - and over 60 percent on imports from China. He aims not only to create jobs but also to finance the extension of his tax cuts. This plan could once again backfire, not only in the US but also worldwide, and potentially destroy millions of jobs. And the average US household's expenses are projected to increase by approximately $1,700 per year, according to studies from an independent US think tank.
Trump's Second Term: A Revenge Campaign Against Critics
Trump's potential second term may become an economic revenge campaign against critics. Allegedly, in 2017, Trump blocked the planned merger between AT&T and Time Warner not for antitrust reasons, but for personal retaliation against the US broadcaster CNN, with whom he was at odds. If he returns to the White House, it's likely that he will attempt to destroy his opponents even more economically and give lobbyists free rein.
Trump made promises during a discreet background meeting at his Mar-a-Lago golf club to abandon environmental regulations and demanded a billion dollars in donations from oil executives in return. His economic agenda goes beyond the open servicing of business lobby interests. Trump seeks a complete overhaul of the state.
If he follows the masterplan for power takeover named "Project2025," which dozens of conservative thinkers and organizations have developed under the auspices of the US think tank "Heritage Foundation," the overarching goal is "to dismantle the administrative state" - in other words, to dismantle and erode the existing central government wherever possible. The conservative wish list includes abolishing the Department of Education and firing tens of thousands of civil servants in the lower or middle ranks who refuse to take the loyalty oath to Trump.
Publicly, Trump has distanced himself from "Project2025." In his social media network Truth Social, Trump wrote that he knew nothing about it. Additionally, some of the ideas are "ridiculous." However, many of his closest associates were directly involved in the development of the masterplan for conservative power takeover. Trump's second term could therefore bring both radical changes and significant surprises for the economy.
In preparation for the United States Presidential Election 2024, Republican presidential candidate Donald Trump's economic agenda has raised concerns among economists. His plans for another round of massive debt-financed tax cuts for the rich and corporations could push the US into a potential debt crisis and lead to higher interest rates, rising inflation, and less growth for both investors and the middle class.
If Donald Trump is re-elected as the United States President in 2024, economists warn that his economic policies could lead to another round of "Russian Roulette" for the world economy, with potentially disastrous consequences. Former Treasury Secretary Robert Rubin and former American Express CEO Kenneth Chenault have warned in the "New York Times" that "a more appropriate analogy is that we have survived one round of Russian Roulette in the economy, and Donald Trump now wants us to spin the cylinder again - but this time with much more bullets in the chamber."
