What are Trump's economic plans?

0:01NPR

0:10It is a big day for the US economy. As expected, Federal Reserve Chair Jerome Powell announced that the Fed was lowering interest rates. The big question was, would it be a shallow cut, a quarter percentage point, or a larger one? Today, the Federal Open Market Committee decided to reduce the degree of policy restraint by lowering our policy interest rate by a half percentage point. This is the first drop since 2020. It's a symbolic withdrawal from the Fed's offensive on pandemic inflation. We will have a lot more to say about the Fed and what this all means in the coming days. For today and tomorrow, though, we're going to look at something that could shake the U.S.

0:50economy even more over the next four years, the election of a new president. This is The Indicator from Planet Money. I'm Darian Woods. And I'm Waylon Wong. Over two days, we're going to explain some key ingredients in the presidential candidate's economic recipes. We'll speak to policy people who agree with the spirit behind some of these economic policy positions. Tomorrow, Kamala Harris. But today, Donald Trump.

1:22This message comes from Vanguard. Capturing value in the bond market is not easy. That's why Vanguard offers a suite of over 80 institutional quality bond funds, actively managed by a 200-person global team of sector specialists, analysts, and traders. They're designed for financial advisors looking to give their clients consistent results year in and year out. See the record at Vanguard.com slash audio. That's Vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor. This message comes from Capital One. Say hello to stress-free subscription management.

2:02Easily track, block, or cancel recurring charges right from the Capital One mobile app. Simple as that. Learn more at CapitalOne.com slash subscriptions. Terms and conditions apply. This message comes from Capital One with the Venture X Card. Earn unlimited double miles, a$300 annual Capital One travel credit, and access to airport lounges. Capital One. What's in your wallet? Terms apply. Details at CapitalOne.com. For the November 2024 presidential election, Donald J. Trump. At a September lunchtime over burrata and heirloom tomatoes, finance professionals in New York listened to Donald Trump.

2:45He was speaking at the Economic Club of New York about economics. 1.3 million workers have become unemployed in the past 12 months. I don't know if anybody knows that. And after damning the economy over the last four years, Donald Trump sauntered into his policies. I am promising low taxes, low regulations, low energy costs, low interest rates. Today, we're going to focus on his economic proposals that stand in greatest contrast to his opponent. Promises to massively hike tariffs, deport a lot of people and cancel a bunch of regulations. Let's take tariffs first. Donald Trump wants to put in place new tariffs of at least 60 percent on China and 10 or even 20 percent on goods from the rest of the world.

3:32That would be an extraordinary tax on fridges and phones and clothing that we import. We decided to call up some analysts sympathetic to some of his policies to learn more. Oren Kass is the chief economist at American Compass. We are a conservative think tank focused particularly on economic policies to move conservatives and the Republican Party more toward addressing the problems of workers. So not quite your free market brand of conservative. No, these people are much happier with government intervention. The idea of significantly raising tariffs on imports from China, basically saying we're not going to treat you the way we treat the rest of the world, I think is very important.

4:14Orin believes the Chinese government has built its own economy at the expense of the U.S. China has really quite intentionally hollowed out the American economy, shifted jobs out of the U.S., out of manufacturing, over to China, and left us very dependent on them. It's worth pointing out that for every new Chinese factory, there's been thousands of American consumers happy to buy cheap Chinese goods. But Orin and Donald Trump don't see it that way. We don't have balanced trade. What the U.S. has is an enormous trade deficit, about a trillion dollars a year at this point. And what that represents is things being made elsewhere to be sent into America for which we are not trading things back.

5:00So the trade deficit happens when the U.S. buys more stuff overseas than it sells. Most economists don't think that in and of itself this is something to worry about. Americans like those inexpensive goods from around the world. But the tariffs will make buying stuff from overseas harder. Two economists from the Peterson Institute for International Economics estimate Donald Trump's tariff proposals will cost the typical American household more than$2 ,600 a year. Oren says that those numbers are overinflated and they don't take into account the government receiving those import taxes. When we collect tax revenue, we don't set that money on fire.

5:35That money goes into the Treasury. And so one thing that we can do is therefore collect less of other types of tax if we want. Or we can use that money to pay down the deficit or actually invest in things. We spoke to the study's authors who told us the figures are, if anything, an underestimate. Like it doesn't take into account retaliatory actions by other countries. They also said government revenues are not factored in when looking at the cost of tax policies. Either way, Orrin agrees that there will be an adjustment period as U.S. companies figure out the enormous new tariffs. A second radical change to the economy under a second Trump presidency would be in immigration.

6:16I will stop the invasion and send criminal illegal aliens back home. Donald Trump has said he would oversee the largest deportation the country has ever seen. There are different methodologies to come up with the exact number of unauthorized immigrants in the U.S., but estimates range from around 11 million to 17 million. Removing workers who are here illegally from the labor market, I think is one that would have a very positive effect on the kinds of jobs that are available for American workers. Research on immigration has found that immigrants typically don't reduce local wages by particularly much.

6:55Once you take into account that immigrants also buy new things, they create their own demand as well. Do you think something of this scale is necessary given that its effect on American-born workers are not that large? Well, I think that claim about the economic research is completely untrue. And the way that we know it's untrue that's been so important to see over the past few years is that when we had very tight labor markets and high levels of inflation, everybody argued that higher levels of immigration was a way to address this. I'm just talking about meta-studies that have just looked in with a non-political lens and they struggle to find anything on average as having a particularly large effect.

7:46I think there are a number of essentially very limited studies in very strange circumstances that find all sorts of effects for particular elements of the labor market, but not other elements of the labor market. There's no question in anybody's mind that massively increasing the supply into the market is going to have a suppressing effect on the price in that market. The National Academies of Sciences, Engineering and Medicine did review the evidence, and they concluded that immigration does overall have a positive impact on long-run economic growth in the U.S. And growth is the rationale behind a third big pillar of Trump's economic agenda, deregulation.

8:32For every new regulation, Trump wants to slash 10. Veronique Derugie is an economist at George Mason University. I'm very interested in getting read of the regulations that achieve nothing and or are counterproductive, but I am more interested in actually reforming the things that are really just holding us back on the innovation front, on the construction front, on the affordability front. For example, Veronique raises the problem of permitting. Sometimes even getting green energy projects like solar farms and public transportation can be held up by seemingly endless environmental reviews. That said, regulation does have its place.

9:14Who doesn't want to reduce air pollution or foodborne diseases or threats to endangered species? I'm not worried because I think it's going to be hard to do. We want to make sure that there's some environmental protection. I think there's just there's a lot of overkill there that doesn't actually achieve much. If you win in November, can you commit... Back at the Economic Club of New York, Donald Trump was asked one last question about what he would do on child care, a key concern for American workers. Well, I would do that. And we're sitting down, you know, I was somebody. We had Senator Marco Rubio and my daughter, Ivanka, was so...

9:59He didn't really answer the question, but he went back to one of his favorite topics, tariffs. Taxing foreign nations at levels that they're not used to. And finished his answer with his famous slogan. Make America great again. We have to do it because right now we're a failing nation. Donald Trump left the stage to the YMCA song amid a standing ovation. Tomorrow on The Indicator, we will dissect key economic policies from Kamala Harris. Stay tuned. This episode was produced by Julia Ritchie with engineering by Sina Lofredo. It was fact-checked by Sierra Juarez. Kate Kinkanen edits the show and The Indicator is a production of NPR.

10:39This message comes from NPR sponsor, Capella University. With Capella's FlexPath learning format, you can set your own deadlines and learn on your schedule. A different future is closer than you think with Capella University. Learn more at capella.edu. This message comes from Mint Mobile. At Mint Mobile, their favorite word is no. No contracts, no monthly bills, no hidden fees. Plans start at$15 a month. Make the switch at mintmobile.com slash switch. That's mintmobile.com slash switch. Upfront payment of$45 for a three-month, five-gigabyte plan required. Equivalent to$15 a month. New customer offer for first three months only.

11:20Then full price plan options available. Taxes and fees extra. See Mint Mobile for details. This message comes from Warby Parker. Prescription eyewear that's expertly crafted and unexpectedly affordable. Glasses designed in-house from premium materials starting at just$95, including prescription lenses. Stop by a Warby Parker store near you.