Trump's plans would increase inflation and unemployment while tanking GDP, report says
On the campaign trail, Former President Donald Trump has touted plans to enact mass deportations and skyrocketing tariffs on imports from foreign countries, especially China, in the name of protecting American workers and industries.
However, according to a new analysis from the nonpartisan Peterson Institute for International Economics (PIIE), those plans — combined with Trump’s push to increase the president’s influence over the Federal Reserve — would help weaken the U.S.’s gross domestic product (GDP), increase unemployment, and make inflation soar.
“Trump often promises to ‘make the foreigners pay,’ but under these measures American households and firms would suffer the most,” the Peterson Institute noted, adding that the manufacturing and agricultural sectors would be “particularly hurt.”
Since his first major presidential campaign in 2016, Trump has been a staunch proponent of reducing illegal immigration, usually in the form of a wall on the U.S.’s southern border. Now, he’s pledging to deport between 15 million and 20 million undocumented immigrants, often pointing to false claims about Haitian migrants in Springfield, Ohio.
The PIIE gamed two scenarios: one where the roughly 8.3 million undocumented migrants who participate in the workforce are deported, and another based on the 1.3 million people deported under the Eisenhower administration’s Operation Wetback, which Trump has cited as an inspiration.
That could see employment fall anywhere between 1.1% and 6.7% below the PIIE’s baseline, causing GDP to fall between 1.2% and 7.4% by 2028. Under the high-end scenario, where 8.3 million people are deported, the dollar value of GDP by 2028 would be essentially the same as this year’s GDP. In other words, a Trump term would bring zero net economic growth — just because of that plan alone.
Trump also wants to put a 10% tariff on all products imported into the U.S. and raise tariffs on Chinese imports by as much as 50%. Combining Trump’s proposed tariffs, deportation plans, and efforts to erode Fed independence could lower GDP by 3.8% to 9.7% compared to PIIE’s baseline by the end of 2028.
At first, employment would rise thanks to Trump’s policies, but fall and remain lower through 2040 unless countermeasures are taken, according to the PIIE. Inflation would rise between 4.1% and 7.4% higher than the baseline inflation of 1.9% by 2026, peaking at between 6% and 9.3%. Consumer prices would then be as much as 28% higher by 2028.
The PIIE’s findings are generally in line with those from other institutions, such as Goldman Sachs and University of the Pennsylvania’s Penn Wharton Budget Model, which have found a Trump presidency would lower GDP and grow the federal deficit. Goldman went as far as to say GDP would be better off under Vice President Kamala Harris, the Democratic presidential nominee.
Economists at Nomura expect Trump’s proposed tariffs to similarly raise inflation, while the conservative American Action Forum on Wednesday said the tariffs would raise costs for U.S. households by as much as $2,350 a year.
