Trump’s Economic And Business Policies Have The Potential To Hurt The American People
The “America First” policy will likely only help the wealthy in America.
By
Emeritus Professor Dr. Mohd Nazari Ismail
Faculty of Business and Economics
Universiti Malaya
The election of Donald Trump as the president of the United States for the second time, making him the 47th president, surprised many people.
After all, in May 2024, a New York jury found him guilty of 34 charges in a scheme to illegally influence the 2016 election through a hush money payment to a porn actor who said the two had sex.
He was also facing other charges in court. Moreover, the American press and media, in general, were also very critical of him.
However, most Americans did not care he was a convicted felon and decided he was good enough to be their president.
Immediately after his announcement as president, all his court cases had to be dismissed; therefore, he is now free from all charges.
Currently, he is busy implementing several economic policies that he promised the American people would improve the American economy. But will his promises be realized?
The slogan “America First” remains a guiding principle in Trump’s economic policy, where he emphasizes that domestic interests should come first in all economic and financial decisions.
For him, commitments to other countries should be reviewed. Among the most important of his concerns is protecting American domestic industry through tariffs and trade restrictions, especially against countries such as China and several others such as Canada and Mexico.
This is a continuation of the approach taken when he became the 45th president of the United States 4 years ago, where he believed that this action would ensure that job opportunities would increase as the manufacturing sector returned to the United States.
Trump also believes tax cuts are an effective way to stimulate the economy. He claims lower taxes stimulate consumer spending and business investment, leading to economic growth.
However, this policy has been criticized by many who believe it will only benefit the wealthy in America.
Another policy that Trump implemented is reducing government regulation in the economy. Trump believes this reduction will stimulate innovation and provide room for business growth.
Trump also emphasizes the importance of America’s leadership in high technology, including investment in artificial intelligence (AI) and new technologies. He intends to expand technology infrastructure to support economic growth.
Trump is now aggressively approaching international trade relations, including tightening trade terms and using pressure tactics to achieve what he sees as more favourable deals for the United States.
His recent imposition of high import tariffs on Mexico and Canada is a prime example. For him, economic security should be a paramount concern for the government, which includes ensuring that critical industries are protected and that there is investment in strategic sectors such as the high-tech sector and the Iron Dome to maintain the country’s security and competitiveness.
While many of these features reflect the policies he implemented during his first term, how they were implemented and the emphasis on specific issues may differ this time around based on changing global and domestic economic conditions and current political dynamics.
More essential to discuss is the future implications of Trump’s economic policies for the United States and whether his policies will revive the country’s economy.
If we analyze his tax cut policies, the primary purpose is to stimulate growth and significantly increase the US federal deficit. However, these policies will reduce the US government’s revenue, and therefore, if implemented aggressively again, the long-term effect may be an increase in the national debt.
This will have a more negative impact on his ability to help the American people and also on US foreign policy, which has a lot of funding for other countries such as Israel and Egypt.
At the same time, this policy will significantly benefit large corporations and wealthy individuals.
This situation will worsen economic inequality in the United States and negatively impact social cohesion. Ordinary Americans may rise against this policy, which could undermine public support for Trump in the future.
Trump’s introduction of import taxes on countries such as China, Canada, Mexico and some European countries is intended to protect American manufacturing. While this may produce short-term gains for some sectors, it could also result in higher consumer prices and retaliation from other countries, leading to a trade war that could damage the entire economy.
So far, China and Canada have already announced retaliatory tariffs against the United States.
The above policy also intends to return manufacturing jobs to the United States. Trump hopes that American companies with manufacturing operations outside the United States will change their policies and move manufacturing activities to the United States, thus creating jobs in specific sectors.
However, this is not as easy as Trump thinks because the manufacturing cost in the United States is high. Therefore, changing the reality of global supply chains and automation trends is difficult.
Trump’s moves to reduce regulations and laws governing the economy and business, especially in environmental policy, could spur short-term economic growth in industries such as fossil fuels.
It could also create an attractive business environment for businesses to invest in America, increasing job creation and economic activity. However, it is essential to note that Trump’s moves could also have long-term environmental and health costs. In other words, these policies will likely increase future generations’ financial, social, and health burdens.
Trump is also inclined to repeal the Affordable Healthcare Act. However, this would likely result in millions losing health coverage, increasing health costs and creating economic insecurity for many low-income Americans.
Trump’s influence on monetary policy, especially in the context of federal spending and tax policy, where he has tended to reduce government spending and favour low interest rates, could significantly lead to inflationary pressures if economic growth outpaces wage growth or significant government borrowing. This would cause the cost of living in America to soar, further undermining the welfare of low-income Americans.
Trump’s policies to stimulate job creation could lead to wage increases in specific sectors, such as high-tech and sophisticated military technology.
However, differences may arise depending on the local economy and the types of jobs created. Job opportunities will be even narrower for traditional sectors that do not rely on high technology.
His policies that want economic growth and investment may stimulate economic growth in specific sectors in the short term.
Still, in the long term, there are concerns about the sustainability of this situation. This is because the US government’s debt situation is likely to remain high, restricting the government’s ability to help people experiencing poverty. Inflation will make the cost of living situation more serious. The government will also be unable to increase spending on infrastructure and education. This will undermine the competitive advantage of the American workforce.
Finally, Trump’s economic policies may encourage populist approaches across the political spectrum, leading to more significant changes in how monetary policy is formulated and implemented in response to public sentiment.
However, the American political and social climate is likely to worsen due to the inevitable increase in the cost of living.
In conclusion, Trump may have good intentions for the American people and sincerely strive to ensure that they have increased job opportunities.
However, he fails to understand that the economic system that depends on the banking system will create new money in large amounts to achieve economic growth while issuing new debts to various sectors in large quantities.
The final result is inflation co-occurring with stagnant wages. As a result, the cost of living problems of the American people will increase, and this may be exacerbated further by high tariffs imposed on imported products.
We should, therefore, not be surprised if, at the end of his presidential term, most Americans, including those who voted for him, will have a very negative view of his ability to run the economy.
Dr. Mohd Nazari Ismail is an Emeritus Professor at the Faculty of Business and Economics, Universiti Malaya.
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