One plank of former President Donald Trump's 2024 campaign is lowering prices for gas and groceries, which remains a top concern of most American voters. But at least one economic expert is doubtful that Trump's policies would do anything to make goods more affordable — in fact, he says prices will likely jump even higher under a second Trump administration.
Trump has argued that he plans to "knock the hell out of the inflation" if sent back to the White House, mainly through a combination of extending his tax cuts for corporations and the wealthy, gutting regulations and slashing government spending. Most of the regulations he has run on eliminating are ones President Joe Biden put in place on extractive industries. Trump has also campaigned on repealing subsidies for the renewable energy industry like those in the 2022 Inflation Reduction Act.
But according to the New York Times, Michael Strain — who is the director of economic policy studies at the conservative American Enterprise Institute — said all signs point to higher prices if the policies Trump is running on become reality.
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"I think we can say with a lot of confidence that President Trump’s trade policies and immigration policies would result in price spikes," Strain said.
Strain pointed to the former president's promises to deport millions of immigrants and impose massive new double-digit tariffs on imported goods as reason to believe higher prices are likely if Trump is president again. He said many of the products Americans buy that line the shelves of big box retailers like Walmart and Target are imported from China and that those high tariffs would be passed down to consumers in the form of higher sticker prices.
Additionally, Strain said rounding up, detaining and deporting millions of immigrants would "cause a severe supply shock to the labor market," as many industries including agriculture, manufacturing, construction and educational and health services rely heavily on immigrant labor. He said that if jobs predominantly done by immigrants — many of whom work for very low wages with no benefits — suddenly became vacant, employers would have significant difficulty getting native-born Americans to fill those roles. Unemployment is still fairly low at approximately 4%, and Strain said Americans would almost certainly pass up those low-wage jobs for work that pays better, and that the plentiful job market would allow them that choice.
"Basic economics say the result would be higher prices, as production falls and labor costs go up. For example, if farmers could not find enough workers to pick all their crops, there would be a smaller supply of produce and it would get more expensive," wrote Times reporters Maggie Haberman, Charlie Savage and Jonathan Swan. "And businesses would be forced to offer higher wages to attract or retain workers — passing on some of their higher costs to consumers."
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Trump has baselessly claimed that the Biden administration is choking the oil industry, and has promised to open up protected lands to oil and gas drilling if he wins in November. But under Biden's watch, domestic oil production has hit new record highs that outpaced even Trump's record. And conservative economist N. Greg Mankiw, who worked in George W. Bush's White House, said Trump's vow to issue new oil drilling leases on federally owned land would have a minimal impact on prices.
"Since it’s a global market for oil, that effect would be fairly muted," Mankiw told the Times.
The May 2024 jobs report showed the economy added more than 270,000 jobs last month alone, outpacing economists projections of approximately 187,000. Wages are also continuing to outpace inflation, meaning that even when accounting for prices going up, Americans still have more money in their pocket on average.
Click here to read the Times' report in full (subscription required).
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