Known as "MAGAnomics," Donald Trump's economic vision has been stressing protectionist policies with an "America First" mantra. However, policies under this term does not sit well with economists who believe it has a negative outlook on long-run growth.
Among the concerns for economists is the protectionist shift, which most think will be more significant than the potential benefits derived from other parts of his policy agenda, such as tax cuts and deregulation.
In recent surveys conducted by the Financial Times, over half of economists, including those from the major institutions of IMF and OECD, expect Trump's policies to lead to a slowdown in global economic growth. The protectionist policies have been described as inflationary: Trump's blanket tariffs of up to 20% on all imports and his plan to deport undocumented workers, which experts fear could harm both global and US economic health in the long term.
The surveys also reveal a gulf between the views of economists and the optimism of investors, who expect growth that will be driven by Trump's "laissez-faire" economics.
US Economy Under Trump's Second Term
On their outlook, analysts argue that though the US economy has been quite good since the pandemic, long-run growth would still be hurt by the trade restrictions and mass deportations and, thus could drag the US economy into a stagflationary environment. This sentiment was echoed by Canada PM, Trudeau last year, who stated that US consumers will be taking the effect of Trump's tariffs.
The Eurozone also has a high likelihood of a slow-down, with major concerns related to the automotive sector in Germany and manufacturing generally. Countries like the UK, although somewhat insulated due to their reliance on services, are still expected to feel the negative impacts of Trump's economic policies.
While most economists are pessimistic, investors are optimistic about Trump's policies along with the improvement in AI technology, and that the markets will continue to grow through 2025. But fears remain that uncertainty and unpredictability of Trump's administration would dampen long-term business decisions and many think this would pull the economy sentiment.
Results of such policies would likely come into the open over the next couple of years, but at present, economists are hesitant about the hope of a more stable global economy under "Maganomics."
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