Analysts are wary of Trump’s policies potentially worsening inflation globally
Washington: Analysts are concerned that a second term for Donald Trump could be detrimental to the global economy because his protectionist US trade policies might further fuel inflationary pressures worldwide. They argue that if Trump continues his first-term approach of high tariffs and a low-tax regime, the impact could be more severe this time, given the current global inflationary trends.
Michael Metcalfe, head of macro strategy at State Street Global Market, expressed this concern, saying, “A second term for Trump is more dangerous as he will likely pursue more inflationary policies than in his first term.” He noted the significant difference between 2016, when inflation and expectations were low, and the current situation of higher inflation and persistent inflationary pressures.
The analysts point out that high tariffs typically increase the cost of imported goods, allowing domestic producers to raise prices, which in turn affects consumers who end up paying more. Moreover, tax cuts could boost consumer spending, further driving up the costs of goods and services.
Both President Joe Biden and Trump have indicated they would increase tariffs on China amid escalating geopolitical tensions between the two major partners. According to a recent poll of economists, a majority foresee higher inflation under Trump due to his aggressive protectionist stance. Those anticipating higher inflation under a potential second Biden term attribute it to expected large spending packages.
In summary, analysts are wary of Trump’s policies potentially worsening inflation globally, especially at a time when the world economy is already grappling with inflationary pressures.
