lAmericans hated Joe Biden’s inflation; They will hate what Donald Trump is cooking for them. Indeed, the Republican candidate’s program, composed of customs duties, mass expulsions of workers and attacks on the independence of the Federal Reserve (FED), promises to be as explosive as Joe Biden’s errors at the beginning of his mandate. Here comes season 2 of Inflation.
The first season had left its mark: the Democratic president had decided on an excessive and ill-timed recovery plan for 2021, while the American economy was recovering from the Covid-19 pandemic and two effective vaccines were available. Combined with the Federal Reserve’s zero-rate policy, which believed inflation was temporary, and the disruption to post-Covid supply chains, inflation soared to 9.1% in June 2022. The spread of the Price increase during Biden’s mandate reaches 20%.
Under Donald Trump, it could also be disastrous, as shown by a study published September 26 by the Peterson Institute for International Economics in Washington, a pro-globalization center-left think tank, which explores three pillars of the policy promised by Trump. the republican. candidate.
The first is the expulsion of the irregular workers who drive American agriculture and industry. The candidate takes the example of a massive eviction operation carried out in 1956 by Dwight Eisenhower, which expelled some 1.3 million workers. The top end of the Trump plan is to deport all illegal immigrants, or 8.3 million people. Second axis of the Republican plan, immediately impose a 10% customs tariff on all imports and 60% on those from China, which will increase import prices and penalize US exports if US partners retaliate.
Screw tightening
Third axis, appoint a president of the Fed, the US central bank, more accommodating than Jerome Powell and interfere in monetary policy, as was the case in the stagflation years of the 1970s, until the appointment of Paul Volcker in 1979. This decision would be self-fulfilling, as markets would anticipate more inflation. All of these measures can be taken quite easily by the president, without much support from Congress, although legal appeal is expected.
According to calculations by the Peterson Institute, annual inflation would jump to 7.4% in 2026 according to the black scenario (massive expulsions, trade responses from US partners) and to 4.1% according to the pink scenario (few responses and limited expulsions ). to 1.3 million people). Gross domestic product would grow less than expected during Trump’s term, almost 10%, or $2.57 billion, at the end of 2028, in the black scenario, or 2.8%, or $750 billion, in the optimistic scenario. Finally, total employment in the United States would fall between 1.1% and 6.7% by the end of 2028, depending on the number of deported workers.
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