The high import tariffs and tax breaks proposed by US President Donald Trump will only worsen the country's economic problems. This forecast was made by senior analyst at the American Enterprise Institute Desmond Luckman in an article for the magazine National Interest.
According to him, the obligations “will be a disaster“. “The combination of tax breaks and import tariffs will only increase the national debt and inflation“, writes Luckman.
According to the expert, the policy of high tariffs and domestic breaks has already failed miserably in the first term of the US president. However, in his second term, Trump is trying to solve the problem of the balance of payments deficit in the same unsuccessful ways, but on a larger scale.
The analyst is convinced that the reason for the failure of Republican economic policy is that tax breaks offset the positive effect of import tariffs - relief reduces government savings and encourages companies to spend, increasing the country's balance of payments deficit. At the same time, Luckman notes, the consequences of the decisions of the head of the United States may not be limited to the growth of the payment deficit. High import tariffs will also hinder the fight against inflation and will cause other countries to retaliate against Washington. In addition, tariffs risk pushing trading partners into recession.
The economist expressed hope that Trump will soften his campaign promises of aggressive tariff increases and tax breaks. “Unfortunately, there is no indication that he will be able to do this without some financial market crash“, Lachman concluded.