Trump.

So as this is VisualEconomic, today we believe it's time to talk about the economic vision of the next President of the United States, Donald Trump's plan for America.

Trump has already been in the White House.

He's already had four years to govern and show the rest of the world what his plans are for making America great again.

And let's face it, everything indicates that a second presidency of the business tycoon will be more of the same, but this time on steroids.

Trumpism 2.0, now more Trump than ever.

But for what reason?

Well, very simple.

In 2016, Trump was an outsider who managed to secure the Republican nomination almost by miracle.

In fact, as we will explain in an upcoming video, Trump never really wanted to be president.

For him, running for president was more about gaining personal status as the great opponent of the Democrats.

The reality is that in 2015, nobody gave a damn whether or not Donald Trump could really beat the successor of such an established leader as Obama.

Well, he didn't actually win the popular vote.

More Americans voted for Clinton than for Trump.

But thanks to the electoral system, Trump was finally elected by the number of members of the Electoral College.

It was really crazy.

And Trump suddenly found himself president of the country without expecting it.

These days, however, the circumstances are very, very different.

In those four years, Trump got used to the position of president.

He liked it.

He wanted to consolidate his power.

And for that, he got the majority of his party on his side, as well as placing many like-minded officials in the institutions.

Do you want some examples?

There are the three members of the Supreme Court that he nominated.

And while this is sometimes overstated, it's true that these are judges with a profile much more likely to vote for things that favor the Republican Party.

Now, this is not to say that all of Trump's appointees were puppets.

Powell at the Federal Reserve has had many, many clashes with Trump.

And Mike Pence feuded with him following the events of January 6 with the assault on Congress.

For many, Pence became a counterweight to Trumpism, both within the government and the Republican Party.

A person who brought seriousness and restraint to the eccentricities of the new occupant of the White House.

But that's over now.

Donald Trump's new vice president will not be Mike Pence, but J.D.

Vance, a man with Trumpism flowing in his veins.

So, during his first term, Trump had to make many concessions to the more moderate wing of his party.

His hands were tied.

But everything indicates that this time, a free hand to implement his vision of America, whether for better or worse.

What would happen then?

That's what we're about to tell you in this video.

Let's go.

Trump shot up tariffs on Chinese goods, from washing machines to solar panels.

Tariffs to which Biden then added fuel to the fire.

Or should I say firewood?

He poured on pure gasoline.

While Trump raised $75 billion by means of punishing Chinese imports, Biden has raised $135 billion.

And of course, we all know by now that Donald Trump is a very bad loser, so he has proposed to leave these figures in the dust.

Trump's 2016 tariffs went up from an average of 3% to 12%.

Now, he wants to go up to 60%.

And let's see, in economics there are many things that depend on each situation.

But there are others that are always true.

Tariffs are paid by consumers, ordinary Americans who buy foreign products.

What does this mean?

Basically that Trump is proposing one of the largest peacetime tax hikes in the entire history of the country.

A tax hike that is also very regressive.

Because yes, tariffs hurt the poorest consumers the most, those who have to buy inexpensive products from other countries.

But not only that, the tariffs also force companies to pay higher prices for the raw materials they used to buy in China.

So they end up losing productivity, real wages go down and prices go up.

The outcome?

As a result of these policies, US GDP is estimated to have fallen by 0.2%.

Of course, none of this is going to stop Donald Trump from doubling down.

For him, these failures, if he recognizes them as failures at all, are the consequences of having imposed tariffs that were too small.

But be very careful, because if the 60% tariffs on Chinese goods surprised you, believe me, it's not their worst trade policy by far.

Because look, you could argue that all the costs we've talked about before are the price to pay in exchange for defeating a dangerous geopolitical enemy.

In other words, we become China loses strength.

The problem?

Well, this argument may make sense, but only to a certain extent.

Because what doesn't make the slightest sense is the Trumpist proposal for a universal tariff.

That is, a tariff that affects not only China, but all foreign products, even if they come from allied countries such as the European ones.

This would mean returning American trade policy to what it was during the Great Depression.

And to give you an idea, many economists believe that the tariffs of this era were one of the main causes of the crash of 1929.

And beware, because this tariff, up to 20%, would be for all products.

But on top of that, it would be necessary to add more to the products that have an extra tariff.

In any case, to defend Trump's position a bit, it could be said that the US already had much higher tariffs in the past, during the 19th century, precisely the century in which the country became the world's leading power.

So, well, they wouldn't be so bad, would they?

Plus, with all the money raised, other taxes could be eliminated.

Since Trump, for instance, has talked about completely abolishing the federal income tax.

However, what you're not taking into account is that, during that time, the presence of the federal government in the economy was less than 2%, not 30% as it has now.

What's more, many economists such as Douglas Irwin have studied the matter and have concluded that these tariffs did not serve to protect the newly emerging US industry, but rather made it much less competitive.

Now, if one thing is clear, it's that the tariffs are going to raise more money for So the question is obvious, how does he plan to spend it?

Trump is clear, he wants to lower taxes.

In his last mandate, the Republican president already lowered the corporate tax rate from 35% to 21%.

This had very positive consequences.

In fact, the GDP grew more than what the state stopped collecting.

Nevertheless, the debt skyrocketed and it looks like Trump plans to continue down this In other words, the US would become one of the countries with the lowest corporate tax in the world.

In the same vein, Trump has also proposed large tax breaks for companies that invest in improving their productivity.

That is, as long as all these investments are made with American workers and equipment.

So your company wants to buy a more efficient machine from a European factory.

Ah, sorry, you'll have to pay all the taxes there.

On the other hand, the now president-elect has proposed eliminating the taxation of overtime hours and tips received in the hospitality sector.

By the way, this was apparently such a popular idea that Kamala Harris copied it within two days of the Republican leader announcing it.

Even so, popular doesn't always mean good.

To give you an idea, with this measure the state would lose 50% more revenue than with the corporate tax cut.

Specifically, $300 billion would be lost over 10 years.

And if the revenue hole wasn't already gaping, Trump also wants seniors' social security benefits to not be counted as income and therefore be exempt from taxation.

Conclusion?

Trump proposes a brutal increase of between 55 and 80% of public pensions, a figure similar to the entire GDP of entire countries such as Ukraine or Slovakia.

And if we add to all this a significant increase in defense spending, reinforcement of the border with Mexico and other smaller programs, the result is that Trump would send the public debt into the stratosphere.

Specifically, over the next 10 years, Trump proposes to lower taxes or raise government spending by $10 trillion, but the new tariffs would barely raise $2.7.

But now, doesn't Trump strongly criticize government spending?

Doesn't he accuse the Democrats of spending hand over fist?

Yes, he does.

For example, he wants to eliminate Biden's industry-boosting spending.

Yet, that would only bring in $0.7 trillion of the $7 trillion by which Trump will increase the deficit.

So it turns out, Trump does like public spending.

What he doesn't like is public spending by Democrats.

Of course, Trump still has a secret weapon, his new best friend, Elon Musk.

Since his assassination attempt, Trump and Musk have been inseparable, thick as thieves.

The Tesla owner has not only publicly announced his support, but is also actively participating in his campaign, and has confirmed that he has been asked to lead a commission tasked with firing unproductive officials.

The idea is that he will repeat what he did at X, formerly Twitter, lay off half of the workers and keep everything running smoothly.

Although, to say that X is running smoothly... well, we'll have to see.

On top of that, he also wants to eliminate all criteria of inclusiveness when hiring public servants.

In other words, to put an end to policies that place some candidates above others, simply because they are women or belong to a racial minority group.

To prioritize excellence above all else.

But let's be honest, this is the same thing that all politicians say.

That it's enough to cut the cowboys and a few silly policies to finance massive increases in public spending.

And they are never, never right.

Not even in the case of Javier Millet, who has ended up having to cut pensions and public aid.

And take note, this isn't a criticism, but things as they are, budget holes are not corrected by just cutting a few slackers.

Nevertheless, not all economic policies have to do with taxes or public spending.

BEYOND THE DEFICIT Trump has proposed reviving an old idea of economist Milton Friedman, school vouchers.

The idea is very simple.

Instead of assigning a school to each child, families receive a check to send their child to the school they see fit.

This can already be done by sending them to a private school, but in this case the family is paying twice, once for the private school and once for their place in the public school through taxes.

This idea is quite good, and we've already discussed it in a previous video that you can see here.

Importantly, this model is already being tested in various parts of the US, from Los Angeles to North Carolina, and the scientific papers we've seen show quite positive results.

In Los Angeles, for example, areas where there is competition between schools have resulted in students getting better grades and, more importantly, significantly increasing their likelihood of going to college.

In this way, Trump also intends to abolish the Department of Education.

How much money would this save?

Well, enough to pay for the corporate tax being cut to 15%.

On the other hand, the Republican candidate wants to improve the lives of Americans through a massive deportation of illegal immigrants.

Not surprisingly, Trump talks about crime and drugs, but there are also three economic arguments.

The first is that immigrants consume a lot from the welfare state.

On this, there is not a lot of consensus and estimates vary too much.

There are scientific articles that estimate that only immigrants without a high school education are negative, and others that only those with a university degree are positive.

The second is that fewer immigrants will translate into lower inflation, pure supply and demand.

If demand goes down because there are fewer immigrants consuming, prices go down.

What happens here is that Trump doesn't take into account that if immigrants leave, the labor supply also goes down and could even increase inflation.

In fact, that is just what we've seen with other deportation programs within the United States, with housing prices going up when immigrants are kicked out because supply falls more than demand.

But there's still a third argument, that immigrants reduce the wages of the native-born workers.

And here there is a point.

Again, there's no great consensus, but the most commonly cited estimates do tend to find a negative impact on native workers without a high school diploma, particularly in the short term.

But of course, in the long run, immigrants also create businesses and jobs.

They also make the best workers much more productive.

Think of a senior engineer who is working part time in order to care for his young child.

With immigration, he could leave his child in the care of a caregiver for very little money and go to work full time, doubling his salary.

And let's not forget the taxes he contributes to the public treasury.

So no matter whether you favor immigration or not, the US is not Sweden.

In Sweden, immigration is a much bigger problem.

In any case, this is not the end of Donald Trump's plan.

Oil, the new goose that lays Uncle Sam's golden eggs.

The president-elect wants to boost production by eliminating environmental regulations.

Here, the Supreme Court justices he nominated may be his best ally.

Because during this term, they have overturned the Chevron Doctrine, a court ruling that gave regulatory agencies a lot of power in interpreting laws.

Now Congress will have more tools for eliminating or simplifying these regulations.

And having said that, it's time to move on to the last block of Trump's economic proposals.

Proposals that are gaining more and more presence in public discourse.

Monetary policy.

Despite the Republican president's nomination of Jerome Powell to head the Fed, the clashes have been constant.

Trump wants low interest rates to finance his huge deficit.

And Powell has a duty to keep rates high so that inflation is fully under control.

And this is just what he's doing.

The Fed remains an independent institution, something Trump is not amused about.

This is one of economists' biggest concerns with Trump's new term, ending the Fed's independence and once again letting inflation rise unchecked.

However, Trump's monetary policy doesn't end here.

As we told you in this other video, his monetary objective is clear, to devalue the dollar.

The summary is that a strong dollar allows the US to borrow almost for free, but in exchange it sinks its industrial sector, which finds it more difficult to compete against other countries with a devalued currency that makes their exports cheaper.

Of course, a fundamental part of Make America Great Again is to re-industrialize the country.