A Critical Look at Trump's Economic Agenda
Donald Trump plans major tax cuts to stimulate economic growth and boost corporate profits. However, this strategy comes at a significant cost: reduced tax revenues are likely to widen the budget deficit and further increase the $36 trillion national debt.
To address the resulting funding shortfall, Trump appears to be relying on increased import tariffs. However, trade wars present substantial risks:
1) They are notoriously difficult, if not impossible, to “win.”
2) American consumers end up bearing the burden of rising prices,
3) Economic weakness limits the effectiveness of protectionist policies.
Tariffs could also push up inflation, limiting the Federal Reserve's ability to lower interest rates further.
Combined with rising debt, reduced fiscal flexibility, and increased market risks, these factors pose significant threats to economic stability.
Scott Bessent's appointment as Treasury Secretary offers hope for stability. The hedge fund manager, known for his pragmatic approach, is expected to focus on safeguarding the economy rather than wholeheartedly pushing Trump's political agenda.
