Though he rails against "globalists," Donald Trump very much lives in an interconnected world, where his economic recommendations would affect global markets, too. He has called for intense deregulation, lowered corporate tax rates, and the "most beautiful word in the dictionary": tariffs. Nevertheless, the prevailing sentiment is that a Trump economy would lead to "higher prices, larger deficits and greater inequality" domestically, a group of 23 Nobel Prize-winning economists said in a letter backing Kamala Harris' domestic economic plan.
What did the commentators say? Globally, a second Trump term would "affect commerce multidimensionally," the Financial Times said. Under Trump's proposed economic policies, a "protectionist and smaller U.S. economy would be a drag on global economic growth," John Hawkins, an economist at the University of Canberra in Australia, said at The Conversation.
Trump's "fondness for tariffs," a sentiment which "most economists do not share," would be particularly harmful internationally, said CNN. Not only would tariffs "hurt global economic growth and drive up inflation in the U.S.," they could also do so overseas as well if other countries "introduce higher levies on U.S. imports in response." Another Trump term is the International Monetary Fund's "elephant in the room," said The Guardian. His "undesirable" economic policies "could reduce global GDP by 0.5 percentage points in 2026."
However, while Trump's proposals might hurt the U.S. economy, they would benefit "most others around the world," said the Peterson Institute for International Economics. Areas with "less U.S. trade would be less affected by the tariffs." This would "attract higher capital inflows as investors, reacting to the erosion of Fed independence, seek to invest in countries with less exposure to the United States, providing a boost to GDP," said the think tank.
What next? The "backdrop" to these arguments, said the Financial Times, is the current U.S. economy, which has proven particularly strong in recent months. Especially in light of Trump's plans to gut the Federal Reserve's independence, the next president should be "eager to build on what is currently a resilient economy" rather than undermining it.
Trump has argued his plan will bring in significant revenue, "increase production at home, create high-paying jobs and decrease inflation," said The New York Times. But by enacting broad tariffs, the ensuing "tit-for-tat" trade wars would "ultimately hurt every country by limiting trade, disrupting global supply chains, slowing growth and pushing up prices." |