WASHINGTON — With his usual confidence, Donald Trump has declared that should he regain the presidency, “inflation will completely disappear.” This message is aimed at Americans frustrated by the persistent rise in consumer prices that has been ongoing for over three years now.
However, many economists disagree with Trump’s assertions, indicating that his proposed economic policies could actually worsen inflation instead of alleviating it. They express concerns that his suggested strategies—such as imposing substantial tariffs on imports, deporting millions of migrant workers, and seeking influence over the Federal Reserve’s interest rate policies—would potentially lead to skyrocketing prices.
In June, a coalition of 16 Nobel Prize-winning economists voiced their apprehensions in a letter, warning that Trump’s economic proposals could “rekindle” inflation, which has significantly decreased since it peaked at 9.1% in 2022 and is approaching the Federal Reserve’s goal of 2%. Last month, the Peterson Institute for International Economics forecasted that if Trump’s policies were implemented, consumer prices could surge significantly two years into his second term. Their analysis projected inflation to be between 6% and 9.3% in 2026, a drastic increase from an expected 1.9%.
On the other hand, economists are also critical of Vice President Kamala Harris’s economic strategies. While they consider her initiatives, such as addressing price gouging, to be inadequate for controlling high grocery prices, they do not label her policies as particularly inflationary. According to estimates from Moody’s Analytics, even if Harris had a Democratic majority in Congress, her policies are unlikely to impact the inflation forecast significantly. In contrast, Trump’s unrestricted approaches could lead to higher prices by 1.1 percentage points in 2025 and 0.8 percentage points in 2026.
Trump’s typical economic strategy revolves around the use of tariffs—taxes on imports—which he claims protect American jobs and provide various benefits. During his presidency, he initiated a trade war with China, setting high tariffs on a wide array of Chinese products, as well as increasing import taxes on foreign steel, aluminum, washing machines, and solar panels. Looking ahead to another term, Trump aims to levy a 60% tariff on all goods from China and a 10% to 20% “universal” tariff on all other imports entering the country.
He maintains that foreign countries bear the cost of these tariffs; however, the reality is that U.S. importers pay these tariffs upfront and typically pass the added expenses onto consumers, leading Americans to shoulder the financial burden. Economists Kimberly Clausing and Mary Lovely from the Peterson Institute have estimated that the implementation of Trump’s proposed tariffs could cost the average American household $2,600 annually.
The Trump campaign points to the period when he enforced tariffs as president as one where inflation stayed relatively low. Nevertheless, Mark Zandi, the chief economist at Moody’s Analytics, asserts that the scale of Trump’s current tariff suggestions significantly alters the situation. He explained that the tariffs during Trump’s first term affected just over $300 billion in Chinese imports, while current discussions involve tariffs on upwards of $3 trillion in goods.
Additionally, the economic context during Trump’s initial term varied, as the Federal Reserve was then concerned about low inflation rather than high rates.
Trump has also expressed intentions to lead a comprehensive deportation initiative, framing it as “the largest deportation operation” in U.S. history. Despite his inflammatory remarks about immigration, many economists argue that the influx of foreign workers in recent years has contributed positively by moderating inflation and averting a recession.
The increase in foreign-born workers has enabled employers to fill job vacancies, which in turn alleviates the wage inflation pressure that typically boosts prices. In 2023, net immigration, calculated as the difference between arrivals and departures, reached 3.3 million—significantly more than anticipations. This influx was crucial as businesses grappled to find sufficient labor in the wake of the economic recovery from pandemic-related shutdowns.
Experts from the Brookings Institution have determined that the growth in the worker pool allowed for job creation without exacerbating inflation. Previously, studies suggested that a maximum of 100,000 jobs could be added monthly without triggering inflationary effects. However, when taking into account the rise in immigration, the potential monthly job growth could be as high as 160,000 to 200,000 without increasing prices.
If Trump proceeds with his mass deportation agenda, analysis from the Peterson Institute indicates that inflation could spike by 3.5 percentage points by 2026 due to the removal of 8.3 million undocumented workers currently part of the U.S. workforce.
Moreover, Trump alarmed economists after announcing that he would want to influence Federal Reserve interest rate decisions. The Federal Reserve plays a critical role in controlling inflation, utilizing interest rate hikes to decrease borrowing and spending, thereby cooling the economy and dampening price rises.
Research has found that a central bank can effectively control inflation only when it operates free from political influence, as political pressures can complicate necessary economic adjustments that may cause short-term pain, potentially leading to recession. Trump has previously pressured Jerome Powell, the Fed chair he appointed, to lower rates to stimulate the economy, a practice that many economists believe surpasses even the historical pressures applied by past presidents.
According to the Peterson Institute, compromising the Federal Reserve’s independence would likely result in an increase in inflation by as much as 2 percentage points annually.
