Claim: Donald Trump claims his proposed economic policies will reduce inflation if he is re-elected for a second term this November.
Rating: This claim is FALSE. There is little evidence that Trump’s economic policies would decrease consumer prices.
American voters consistently rank “the economy” and “inflation” as the most important issues facing the country, according to polls conducted by NPR/PBS NewsHour/Marist and the Pew Research Center. More polls show that voters in swing states trust Trump more than President Biden when it comes to matters of the economy.
Trump consistently attacks Biden’s economic policies, blaming him for increased inflation rates over the past few years. But economists across the political spectrum fear that Trump’s proposals to bring consumer prices down would actually have the opposite effect, with plans that include expanding U.S. oil production, increasing tariffs on imported goods, and enacting mass deportations.
Proposal #1: Expanding U.S. Oil Production
Trump has stated repeatedly that his main solution to inflation would be to expand oil production in the U.S. His campaign told ABC News in February that they believe maximizing domestic oil and gas production will “create an economic boom and bring inflation to zero.”
“Remember this, gasoline, fuel, oil, natural gas went up to a level that it was impossible not. That’s what caused inflation, and we’re going to bring it down because we’re going to go drill, baby drill. We drill, baby drill,” Trump stated at a Las Vegas campaign rally in January.
But crude oil production already reached an all-time high under Biden last December and is expected to keep rising throughout 2024, according to a report from the Energy Information Administration. A Forbes analysis of EIA data shows that the U.S. has been the world’s largest oil producer since 2012.
Data from the Interior Department also show that Biden has already approved more oil and gas drilling permits than Trump did during his presidency, granting 3,377 permits to drill on public land in 2023.
Even with domestic oil production higher than ever, economists agree that this has little influence on the price of gas in the U.S. Experts from the World Economic Forum explain that consumer prices are largely dictated by the volatile global market, influenced by factors outside of the White House’s control. Thus, increasing domestic oil production isn’t the simple solution to make prices go down that Trump says it will be.
Proposal #2: Increasing Tariffs on Imported Goods
Trump has proposed a 10% tariff on all imported goods to incentivize American production, and is considering imposing tariffs of 60% or higher on Chinese imports specifically, he stated in an interview on Fox’s “Sunday Morning Features.”
But similar tariffs put in place during his presidency actually ended up raising prices for consumers and causing one of the largest tax increases in decades for American consumers, according to data analyzed by the Tax Foundation.
The analysis showed that tariffs imposed during the Trump administration caused an $80 billion tax increase as a result of retaliatory tariffs from U.S. trading partners, a response that economists believe is likely to happen again.
Analysts from the center-right American Action Forum predict that with these retaliatory tariffs, Trump’s proposed 10% tariff would decrease GDP by $62 billion and decrease U.S. welfare by $123 billion, stifling economic growth and causing higher prices for American consumers. Adam Posen, president of the Peterson Institute for International Economists, told the Washington Post that Trump’s plan could raise the consumer price index by two or three percentage points, roughly doubling the current pace of inflation.
Proposal #3: Enacting Mass Deportations
Trump has promised voters he will direct U.S. Immigration and Customs Enforcement (ICE) to undertake the “largest domestic deportation operation in American history,” resulting in labor shortages in industries like construction, hospitality, and agriculture that economists say will drive up consumer prices.
A National Agricultural Workers survey shows that the agricultural industry relies on a predominantly immigrant workforce, the majority of them from Mexico, and that approximately 44% of farmworkers are undocumented.
Federal Reserve Chair Jerome Powell has stated that the biggest barrier to taming inflation is higher wages, caused by a workforce shortage. Therefore, many economists believe that increasing immigration can help keep consumer prices down, as shown by research from the University of Chicago.
“Inflation occurs when the demand for goods and services grows faster than supply,” Mark Regents, a labor economist and senior fellow at the National Foundation for American Policy, told Forbes. “Increasing our ability to produce by increasing the supply of labor is the least painful way to control inflation.”
Conclusion
Though Trump claims he will help curb inflation, there is little evidence his proposed economic policies will actually have that effect. With the economy as a top priority for Americans across the country, voters must have a clear understanding of how Trump’s policies may impact consumer welfare if elected this November.