It's Hard for a President to Ruin the Economy...Unless You Do the Exact Things Trump Wants to Do
Want to ruin an economy, and fast? Implement MAGA policies immediately
Presidents don’t have near the power over the economy everyone tends to think they do. If they did, why would the economy ever go into recession? Or why would gas prices ever rise? Or cereal? Or eggs?
Presidents don’t pull a lever labelled “Economy”, with a gauge that goes from 1- 10, with 1 being “Bad” and 10 being “Good”, and put it at a certain setting. There’s only so much they can do to make an economy good or bad, and just about anything they do involves the help of Congress passing laws, and generally can take years to implement and take effect.
They can have some short-term effects, but usually it’s short-lived and mostly market-based, rather than macro-economic based. For example, if they say something unnerving about world affairs, maybe the stock market goes down for a day or two (and will rebound once it’s apparent that nothing has really changed). But presidents won’t change the unemployment rate by making such a statement. Macro-economic measures that indicate the health and well-being of the economy, such as unemployment rate, GDP, or productivity, are the result of our capitalistic society and free-markets, not immediate presidential actions.
However, if a president tried hard enough, they probably could do things that have an effect on the economy, but only on the negative side. It’s like the old adage that it’s much harder to build than to destroy. Well, if one really tries hard enough, they could destroy our economy with relative haste.
And, weirdly for and “America First” zealot, Donald Trump seems to have a policy platform—if you can even call it that—that is geared toward just this outcome: destroying our economy as fast as possible.
Let’s examine his top economic priorities and the potential effects they would have:
100% Tariffs on foreign cars
Mass deportation of undocumented immigrants and draconian discouragement of immigration
100% Tariffs on foreign cars
This would be an absolutely disastrous policy that would have a wide-sweeping negative effect on the economy. It would increase prices—otherwise known as the Republican boogeyman of “inflation”—and create tensions with foreign adversaries that intensity of which we have not experienced in recent history.
It might start out small; after all, Trump was referring to Chinese automobiles made in Mexico (I think….it’s the best I could decipher from his ramblings) and imported directly to us to be sold in the U.S. A 100% tariff would roughly double the cost of the car and likely price it out of the market. But there would be many unintended consequences that could and likely would spiral out of control.
Tariffs have largely stopped being used since WWII, due to their irrelevance for funding the U.S. government and their historically detrimental effects on trade relations and local economic conditions. Many scholars attribute the Smoot-Hawley Tariff Act of 1930, and the resulting trade wars with European nations, as one of the main causes of the Great Depression of the 1930s and the rise in political extremism during that time that culminated in fascist movements, causing the eventual military clashes of WWII.
When you raise tariffs on a country, it puts makes it harder for that country to sell their good here. Therefore, they tend to retaliate against U.S. goods being imported into their country, and before you know it, a trade war has started. A trade war could devolve quickly into an actual war as a battle of resources could ensue as more and more goods are being restricted in trade. We already have tensions with China. Exacerbating them with in this way would bring us closer to WWIII, from which Trump and MAGA Republicans are always saying they will keep us away.
In addition to this, prices across the board will almost certainly go up for all Americans. First, the price of these cars will skyrocket. Then, as China raises their own tariffs on our goods and/or services in retaliation, we will do the same back to them, and so on and so on. Remember that much of our goods are produced in China for low labor and materials costs. Those would shoot up in a tariff-induced trade war, raising prices on a huge portion of our economy. If we think inflation is bad now (it actually isn’t bad at the moment, but was bad in 2022, and there has since been a significant recovery, but Republicans will have you believe that inflation is the bane of existence and Democrats caused it on purpose and will be the downfall of America), wait until we apply these tariffs. It’s hard to imagine how this would help inflation at all. In actuality, it will create inflationary pressures that will cause immense hardships for everyone in all sectors of the economy.
Mass deportations and draconian restrictions on immigration
This is a touchy subject, of course, as immigration is being vilified by Republicans as being the cause of all ills in our country, and the impetus allowing Democrats to win and/or cheat at elections. So basically, according to them, not only is our economy being ruined by immigration, but the Republican Party itself is hopelessly endangered politically because of it. This is a dangerous combination.
But the reality is that immigration is necessary for our country’s health, it always has been and likely always will be. The idea of a static population of only the native-born and their descendants being exactly what this country needs is preposterous. Immigrants contribute to high growth overall prosperity in this country in ways that would be almost impossible if it was heavily restricted.
Current estimates by the Congressional Budget Office (CBO) are that immigration will increase GDP by an average of .2 per year for the next 10 years. GDP has been consistently strong in the post-pandemic age, and immigration is often cited as a reason why our current economic conditions remain so resilient and growing. And if immigrants were taking the place of native-born workers, as anti-immigration hard-liners suggest, then why is the unemployment rate for native-born workers significantly lower than foreign-born, 3.6% vs 5.2% respectively? And even if you consider people that are here illegally, the same principle applies; if they truly took jobs away from native -born people, that would also be reflected in the unemployment rates—native-born workers’ unemployment rate would be higher than the historically low 3.6% it is today.
Many experts from a wide range of the political spectrum, from J.P. Morgan to the Brookings Institution to the Republican Controlled House, admit that immigrants, legal and illegal, are very positive for the growth of the economy due to contribution to economic activity, such as consumption and labor. They are a large reason the country can have high job growth rates that does not necessarily cause higher inflation. Increased consumption helps keep businesses healthy, and therefore allows them to create more jobs and pay higher wages. So basically, by restricting legal immigration and forcing millions of undocumented immigrants to leave, you’d be removing a huge portion of our economy. This would create less opportunity for everyone.
And while it’s true that illegal immigrants are a low-cost source of labor and might “keep wages down”, this is only really true in lower-skilled sectors of the economy, a sector that most native-born folks don’t want to work in anyway. The only way to get native-born people to work in them would be to substantially raise wages to attract them. This might sound great at first, but if your main criticism of the Biden Administration is inflation, you’re going to be disappointed when inflation rises due to these businesses raising prices to cover these higher labor costs. It raises the standards of living of all the native-born population to have lower-skilled undocumented immigration working lower-paid jobs that no one else really wants to work.
Protectionist policies don’t tend to work out well
In short, tariffs and anti-immigrations policies scratch political itches, but they are highly protectionist policies that make the country as a whole worse off. Yes, modernization and global free trade creates some pain for some sectors of the native-born population, and their needs should be addressed. But the idea that making every product whose supply chain might touch foreign soil much more expensive through tariffs, or restricting population growth through draconian restrictions on immigration, are going to help these grievances is not true.
No, they will ensure low growth, high inflation, and create tensions that increase the likelihood of a world war. These are exactly the things that Trump and MAGA promise to prevent with their America First propaganda. As writer Matthew Yglesias points out repeatedly on his Twitter/X Account,
Nothing in these MAGA proposals actually make things cheaper, and they are likely to increase the one bugaboo they constantly talk about: inflation. In addition, they will slow economic growth and create less opportunities for success and wealth for everyone.
As mentioned above, one only needs to look at the 1930’s for an historical example of how these policies spiral out of control to the detriment of the country implementing them. Want to destroy a nation’s economy, and fast? Implement the Trump MAGA policies immediately.