Trump became very aggressive after his victory. He began his Presidency by threatening immigrants, he lied about inflation and the state of the economy, he reaffirmed his commitment to promoting oil exploitation without any environmental protection, he made it clear that he will eliminate any gender recognition other than the traditional one, male and female; he stated that he will introduce additional tariff barriers.
But he said nothing about the health or housing problems that are central to the country’s problems. He ignored the need to update the minimum wage, which remains at practically irrelevant levels, just over $7 per hour. Nor did he say anything about the distribution of incomes, which, everything indicates, worsened even more after the Pandemic.
The government issued a series of presidential decrees and began to implement several measures in this regard.
The persecution of immigrants can create serious problems in various economic activities such as agriculture, restaurants, construction and others. Absenteeism has already been reported in agricultural activities in California. Some foreign residents, even though they are documented, may still suffer police harassment just because of their look. They must prove their legal status after suffering a few hours of arrest and, most likely, mistreatment.
Trump lied about inflation in the US and the state of the economy. Inflation peaked at 10% annually in 2022, that is during the Pandemic, then dropped rapidly and it is now around 2.7% annually. Some prices remained very high in relative terms and the consumer naturally felt this. What we has witnessed is a regressive distribution in incomes that caused frustration and resentment in the electorate. Trump knew how to intelligently take advantage of that situation. But it would be naive to think that his government will try to correct this regressive distribution of incomes. On the contrary, his government appears dominated by big businessmen. To illustrate that point: Donald Trump’s electoral campaign and Presidential Inauguration expenses have been financed, among others, by the new technology oligarchy. Three CEOs of the main technology companies were specially invited to his swearing-in. According to Senator B. Sanders, these companies have increased their profits by more than $200 billion since November 5, when Trump won the election; This is in less than three months.
The US economy is by no means stagnant: over the last two years it has grown around 2.8% annually, which is not a bad performance for an economy with this level of development. Unemployment is around 4%, which is close to full employment. Many industries are struggling to find employees, particularly in restaurants, healthcare and construction.
Trump says he will increase tariffs on imports from Canada, Mexico, China, even Europe. Tariffs on Chinese products have already been increased before. We do not know what the additional impact of the new import tariff rates will be since they were not announced yet. It is anticipated that they will impact consumer prices and will hardly boost industrial production in the protected sectors given the shortage of labor. Furthermore, as a reaction to the increase in prices within the United States, it is very likely that the dollar will appreciate vis-a-vis other currencies and in this way the tariff increases may be partially offset and will not be able to stop imports, not to the extent desired.
Beyond the demagogic rhetoric about the supposed inherited inflation, for which Trump did not offer any corrective measures, the population, particularly workers and young people, suffer from the excessive cost of health and housing. Not only did Trump not offer any solution in this regard, he did not even mention those problems. He always proposed to eliminate Obamacare, which, although it did not solve all problems, at least created better conditions. Because of the interests he represents, it is very difficult to think that Trump will control the prices of medicines that explain a substantial part of the increase in health costs.
Housing problems are tremendously complex and most politicians do not even dare to outline a solution. The state subsidies that are likely to be necessary in any comprehensive solution would be very high and would involve raising taxes, particularly on the richest, something the establishment in general and certainly Trump would never attempt.
Environmental problems threaten everyday survival and the planet. The US suffers from it all the time: floods, fires, extreme temperature variability, etc. Contrary to environmental protection, Trump decided to withdraw from the world organizations and announced that he will expand oil production and consumption. It will surely suspend all support for the introduction of renewable energy such as solar energy.
In conclusion, nothing good can be expected from this Administration in the economic, social field, or in the fight to protect the environment. If Trump’s policies cannot be stopped, their impact inside and outside the country will be, in my modest opinion, highly negative.