It’s not new news that Donald Trump won the most recent Presidential election, and that one of the waves he rod on was reducing inflation. Many Americans were concerned with high prices of gas and necessities to live, such as eggs, bread, and milk. Now that Trump has won the election and is in office, how will he actually decrease inflation? While we can’t say for sure, here’s what the experts predict.
How Will Trump Decrease Inflation?
In his inaugural address, Trump stated “I will direct all members of my cabinet to marshal the vast powers at their disposal to defeat what was record inflation and rapidly bring down costs and prices”, so it is clearly a priority for him. One way the Trump administration plans on decreasing inflation is by opening more federal land to make it available or oil drilling. This would increase the supply of oil in the market, thus decreasing the price for Americans to fill up their cars. Additionally, Trump plans on loosening regulations in multiple industries, as well as decreasing government spending. Joe LaVorgna, chief economist of the National Economic Council during Trump’s first term said “It’s going to be energy, deregulation, and driving down waste in government spending to free up scarce resources.” The Trump administration believes that deregulation can and will decrease inflation, but how is that possible?
Deregulation lowers the cost of complying with environmental and government rules and policies, which allows for products to be produced faster. The Trump administration believes that this lowers the cost and time for companies, allowing them to decrease the cost consumers have to pay for such goods. Not everyone is in full support, however. Mark Zandi, chief economist at Moody’s Analytics, claims that this plan will take years to be effective, and that “even then there is no certainty it will reduce price.” Other forecasters claim that Trump’s economic strategies and policies may even increase prices.
What Impact will Tariffs have on Prices?
Trump also mentioned that he will put in place multiple tariffs on imports, with the idea of protecting American goods. Tariffs can, however, increase prices on goods that consumers may want if the goods are made internationally. Others claim that if Trump deports millions of illegal immigrants, there would be a massive labor shortage, driving up wages and prices. Jeremy Mayer, associate professor at George Mason University, said ““Everything Trump is doing is likely to cause higher inflation than there was in the last year of the Biden administration.” The Trump administration, however, disagrees. LaVorgna believes that discouraging imports would strengthen the value of the dollar, which would at least in part offset the higher prices.
While it’s hard to tell exactly what will happen to prices, it’s safe to say that time will tell. What do you think about Trump’s economic policies? Will they help inflation go down, or make it even worse? Let us know in the comments.
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