As Donald Trump considers a return to the presidency, experts warn that his policies could pose serious risks to the nation. If Trump returns, his economic plans might increase the federal debt by a staggering $7.75 trillion over the next decade. This includes extending tax cuts for corporations and the wealthy, which could add $5.8 trillion to primary deficits. Additionally, exempting certain incomes from federal taxes may widen the fiscal gap even more. Trump’s regulatory rollbacks could help the oil, gas, and coal industries, but they would reverse the climate policies set by the Biden administration. The rescission of funds for renewable energy projects could stall growth in electric vehicles and solar power. While these changes might lower compliance costs in the short term, they would raise environmental risks and potentially lead to financial instability. The federal budget process could become more complex as fiscal policies shift under his administration. Given that Trump’s coalition in 2024 was more racially and ethnically diverse, the impact of his policies could resonate differently across various communities.
In the area of trade, tariffs on imports are expected to increase inflation by 0.8 percentage points next year. This could also harm U.S. manufacturers by raising their costs, making it harder for them to benefit from reshoring jobs. If a trade war with China occurs, it could slow global economic growth, creating uncertainty in international trade. Trump’s immigration policies could lead to mass deportations and a sharp decline in legal immigration. This might create labor shortages in vital sectors, negatively affecting economic growth. Analysts from Brookings and other organizations predict serious consequences from these actions.
On foreign policy, Trump might cut military aid to Ukraine, which could destabilize the region. Reducing the U.S. presence abroad could empower authoritarian regimes and weaken international institutions. Finally, Trump’s return could lead to increased market volatility. Deregulation and policy shifts would likely drive up bond yields and mortgage rates. Moreover, a potential shift towards a more favorable regulatory environment for digital assets could introduce new risks for investors. All these risks could create a fragmented and competitive international order that poses challenges for the U.S. and its allies.
