Has Trump promised too much about the US economy?

Donald Trump has promised big changes for the world’s largest economy.

On the agenda are the “end of the devastating inflation crisis”, tariffs and large tax cuts, regulation and the size of government.

This combination, he claims, will spark an economic boom and revive withering faith in the American dream.

“We are at the beginning of a great, beautiful golden age of business,” he promised from the podium at Mar-a-Lago earlier this month.

But warnings loom over the president-elect that many of his policies are more likely to hurt the economy than help it.

And as he prepares to put his plans into action, analysts say he is about to run into political and economic realities that will make it difficult to fulfill all his promises.

“There is no clear path forward right now on how to achieve all of these goals because they are inherently contradictory,” said Romina Boccia, director of budget and entitlement policy at the Cato Institute.

Here’s a closer look at its key promises.

What Trump promised:

“Prices will go down,” he repeatedly stated.

It was a risky promise: prices rarely fall unless there is an economic crisis.

Inflation, which measures not price levels but the rate of price increases, has already decreased significantly, although it is difficult to eradicate it completely.

What complicates it:

Trump cited his claim to promises to expand America’s already record oil and gas production by reducing energy costs. But the forces affecting inflation and energy prices are largely outside presidential control.

To the extent that White House policies make a difference, analysts have warned that many of Trump’s ideas – including tax cuts, tariffs and immigrant deportations – risk making the problem worse.

Economist John Cochrane of the right-wing Hoover Institution said the big question facing the economy is how Trump will juggle the “tension” between the more traditional pro-business parts of his coalition and the “nationalists” who focus on issues such as border control. and rivalry with China.

“Clearly both sides can’t get what they want,” he said. “That’s going to be the underlying story and that’s why we don’t know what’s going to happen.”

What Trump voters want:

Inflation promises were key to Trump’s victory, but by many measures, such as growth and job creation, the overall economy was not in the dire situation he described during the campaign.

Since his victory, he has tried to lower expectations, warning that it would be “very difficult” to lower prices.

Amanda Sue Mathis, 34, of Michigan, says she believes Trump’s promises are feasible but could take time.

“If anyone can make better deals to make things more affordable for Americans, it’s Donald Trump,” he said. “He literally wrote the book on the art of doing business.”

What Trump promised:

Trump’s most unorthodox economic promise was his promise to impose tariffs – a border tax – of at least 10% on all goods entering the United States, which would increase to more than 60% for products coming from China.

Since then, it has escalated threats against specific countries, including allies such as Canada, Mexico and Denmark.

Some of Trump’s advisers have suggested that tariffs are negotiating tools for other issues, such as border security, and that he will ultimately settle for a more targeted or gradual approach.

What complicates it:

The debate has sparked speculation about how aggressive Trump will decide to be, given the potential economic risks.

Analysts say the tariffs are likely to lead to higher prices for Americans and suffering for companies hit by foreign retaliation.

And unlike Trump’s first term, any moves will come at a delicate time, as the long-running U.S. economic expansion appears to be in its final stages.

Even if the stricter tariffs never materialize, the political debate alone is generating uncertainty that could depress investment and reduce growth in the United States by up to 0.6% by mid-2025, according to Oxford Economics.

“They have a very limited margin for error,” Michael Cembalest, president of investment and market strategy at JP Morgan Asset Management, said in a recent podcast. He warned that the desire for major reform will likely “break something,” although that remains to be seen.

Trade lawyer Everett Eissenstat, who served as a White House economic adviser during Trump’s first term, said he expected a widespread tariff but acknowledged the plan would compete with other goals.

“There are always tensions. There is never perfection in the policy world. And obviously one of the reasons I think he was re-elected is concern about inflation,” he said.

“We are in a different world (than the first term) and we will have to see how it plays out,” he said.

What Trump voters want:

Longtime Republican Ben Maurer said he wanted Trump to focus on the broader goal of reviving manufacturing in the United States, rather than tariffs per se.

“I feel like it’s more of a negotiating tactic than an actual political route,” said the 38-year-old, who lives in Pennsylvania.

“I’m not saying he won’t impose tariffs on anything, I think he will, but I think he will be more strategic about exactly what he will impose tariffs on. I support him and feel his judgment is good enough to decide what to apply.” tariff.”

What Trump promised:

He has laid out a plan for growth: lower taxes, less regulation and a smaller government, which he says will give free rein to American businesses.

What complicates it:

But analysts say cutting regulation could take longer than expected. And Trump is widely expected to prioritize extending expiring tax cuts over cutting spending.

The Cato Institute’s Boccia said he expected borrowing to increase under the Trump administration and that the increase would increase inflationary pressures.

In financial markets, those concerns have already helped drive up interest rates on government debt in recent weeks, he noted.

Although Trump will also face some resistance from those within his party concerned about the already high U.S. debt, Boccia said extending the tax cuts – which are projected to add more than $4.5 trillion to U.S. debt over the next decade – seemed almost certain.

By contrast, Trump banned much of the budget during his campaign when he promised to leave big programs, like Social Security, unchanged.

The so-called Department of Government Efficiency (DOGE), led by Elon Musk and Vivek Ramaswamy, has also publicly reduced its ambitions.

“The signals that the market is sending right now are being picked up by economists, but not really by Washington,” he said. “In the end, politically you are taking the path of least resistance.”

What Trump voters want:

Maurer said reducing bureaucracy was key to his hopes for the administration.

“Public spending is absolute madness,” he said.

Additional reporting by Ana Faguy