“There’s a lot of inflationary pressure in his promises,” says Simon Johnson, one of the 2024 winners of the Nobel Prize in Economics and a professor at MIT’s Sloan School of Business.
Trump has said he would enact tariffs of 60% on goods from China and tariffs of at least 10% on all imports into the U.S. The cost of those tariffs will be paid by consumers buying the imported goods. The President-elect said he would oversee the biggest mass deportation of undocumented people in U.S. history, which could lead to labor shortages in industries like agriculture. He’s also pledging more tax cuts, which could boost consumption, setting off more inflation.
Put together, economists say his proposals could drive up the costs of apparel, toys, appliances, and food. Trump’s own allies have sometimes acknowledged as much in the lead-up to the election; Elon Musk, for example, warned of “temporary hardship” for ordinary Americans as Trump enacts his plans, including government spending cuts.
Trump has consistently advocated for imposing tariffs on imported goods in an effort to keep manufacturing in the U.S. The amounts he’s proposed have been as high as 60% on goods from China, 25% on goods from Mexico, and 10%-20% on goods from everywhere else.
While Trump has claimed that foreign countries pay these tariffs, in reality, the importer pays them, absorbs what they can, and passes the rest on to the consumer. The Budget Lab at Yale has estimated that the Trump tariffs would initially drive up consumer prices by up to 5.1%.
