A second Trump administration could significantly reshape the U.S. economy through various policy proposals. The former president’s plans include extending and expanding tax cuts, imposing tariffs on imports, and implementing strict immigration policies.

Trump has proposed extending portions of the 2017 tax cuts and introducing new reductions, including exemptions for tipped income and Social Security benefits. Wells Fargo economists Jay Bryson and Michael Pugliese noted, “Some additional tax cuts seem probable in our view, although the timing, size and specifics are highly uncertain.”

However, the economic stimulus from tax cuts could be offset by Trump’s proposed tariffs on imports, ranging from 10% to 20%. Economists warn these tariffs could increase inflation and harm U.S. manufacturers. Samuel Tombs of Pantheon Macroeconomics stated, “It will remain much cheaper to source goods from overseas, given relatively high U.S. labor costs, limiting the reshoring boost.”

Trump’s fiscal policies are expected to significantly increase government debt. The Committee for a Responsible Federal Budget estimates an additional $7.75 trillion in debt over the next decade, potentially leading to higher bond yields and mortgage rates.

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Immigration Policies and Economic Impact

On immigration, Trump has called for mass deportations and stricter limits on legal immigration. Analysts project that these policies could result in negative net migration, potentially impacting the U.S. job market and economic growth.

The Federal Reserve may face challenges in a second Trump term. The central bank might need to proceed cautiously with interest rate cuts if Trump’s policies increase inflationary pressures. Additionally, Trump’s past criticism of the Fed raises concerns about the institution’s independence.

While the exact implementation of these policies remains uncertain, their potential impact on the U.S. economy is significant, affecting everything from consumer prices to labor markets and monetary policy.

Read more at NPR