Wall Street is panicking that former President Donald Trump’s populist economic policies will hurt growth in a second term, but experts told the Daily Caller News Foundation that it’s average Americans who stand to benefit.
Wall Street traders are increasingly betting that Trump will win the presidency following President Joe Biden’s dismal debate performance at the end of June and are worried that the former president’s immigration and trade policies will hurt topline economic growth, according to Politico. While Trump’s economic policies might harm the results of headline economic reports, they channel benefits to average American workers who are dealing with the effects of a massive surge of illegal immigration and unfavorable trade policies, according to experts who spoke to the DCNF.
Trump has campaigned and governed on key populist policies that prioritize trade protectionism and American manufacturing. This goes hand in hand with Trump’s immigration policy plans for his potential next term, as he pledged to implement the largest domestic mass deportation during an Iowa campaign speech in December.
“What the Biden administration has done is they have just essentially stopped enforcing border laws, and they parole these illegal immigrants into our country,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF. “They give them work visas. And this is why people on the left are saying that Trump’s policies would cause inflation. It’s because if we deport all of those workers, then somehow we wouldn’t have enough workers to do all the work that’s currently being done.”
In the last year, the number of employed foreign-born workers rose by over 600,000 to nearly 31 million, while the number of employed native-born Americans dropped by nearly 300,000. The disparity indicates that benefits under Biden are going to foreign-born workers rather than native-born Americans.
“The average American is no longer going to have to compete against the incredibly low-wage labor that is driving down the standard of living,” E.J. Antoni, a public finance economist and Richard F. Aster fellow at the Heritage Foundation, told the DCNF about the effect of Trump’s immigration policy in a second term. “In other words, you will increasingly see businesses pay living wages to their employees.”
“This was actually a key reason why a lot of blue-collar jobs saw such rapid wage growth during the first Trump term,” Antoni told the DCNF. “It was because they really helped stem the tide of illegal immigration that existed before Trump. As less of that illegal labor came across the border, it helped buoy the labor market, at least for Americans.”
A key feature of Trump’s economic policy in his first term that remains a part of his planned agenda for a second is trade protectionism, which involves setting tariffs on imports, particularly from foreign competitors like China, and promoting American manufacturing.
“Take a look at the significant application of tariffs that President Trump did during his first term,” Faulkender told the DCNF. “We had sub 2% inflation during his entire presidency. So if applying tariffs at the scale President Trump has talked about were to be as inflationary as the Democrats or demagoguing people into believing, where was the inflation during President Trump’s presidency?”
Peter Earle, senior economist at the American Institute for Economic Research, disagrees with the effectiveness of tariffs, arguing that these trade policies ultimately burden American business owners and consumers by raising costs through inflation.
“Because disinflation is underway, for now, it seems less likely that the concern is higher rates of inflation in coming years owing to monetary policy,” Earle told the DCNF. “It’s more likely that worries about Trump’s promised tariffs are causing higher yields on longer-term bonds. Tariffs increase the costs of imported goods, and if they are put on a wide variety of goods can give rise in the overall price level of goods and services.”
“To be sure, his recent call for 60% tariffs would be devastating to world trade, even beyond the U.S. and China. When costs to businesses rise, such as those for inputs which are imported, consumer prices will rise,” Earle told the DCNF.
Other economists, like Faulkender, say that Trump’s economic and trade policies actually benefit Americans across the board.
“The Trump era was very good for average Americans, for working-class Americans, and it was good for investors,” Faulkender told the DCNF. “If you look at the stock market’s performance during the Trump administration, it did exceptionally well. I really just dispute this analysis, coming from the left, that suggests that the economy is this zero-sum game and that benefiting workers is bad for investors. With the right set of policies, we can improve outcomes for investors and workers alike. That was the record under President Trump, and that’s what I expect the second term to go back to.”
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