Portrait of Donald Trump
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Donald Trump on Economic Policy

Protectionist Tax Cutter (strong)

Donald Trump's economic policy is fundamentally rooted in economic nationalism, characterized by a strong emphasis on protectionist trade measures and substantial tax cuts. During his first presidency, he signed the Tax Cuts and Jobs Act of 2017, which lowered corporate and individual tax rates, while simultaneously increasing federal spending, leading to higher budget deficits and national debt. In his second term, Trump has promised to extend these tax cuts and pursue further deregulation, while drastically increasing tariffs, with proposals for a universal baseline tariff of 10% and up to 60% on Chinese goods, aiming to substitute tariff revenue for income taxes.

Context

Donald Trump's views on economic policy stem from his background as a real estate developer and his self-styled image as a successful businessman. His political platform has consistently prioritized trade protectionism and significant tax reform, contrasting with more traditional Republican free-market orthodoxy, especially in his second term where he embraced elements of state capitalism.

Timeline

  1. Signed the Tax Cuts and Jobs Act and began a push for massive deregulation, claiming a policy priority of promoting individual freedom and economic growth.
  2. Responded to the COVID-19 recession by signing the massive CARES Act stimulus bill.
  3. Campained on an economic nationalist system featuring higher tariffs (universal 10% baseline, 60%+ on China) and extending his first-term tax cuts.
  4. Implemented steep, nearly universal tariffs, drastically increasing the effective US tariff rate and escalating the trade war with China, Canada, and Mexico.

Actions Taken

  1. Tax Legislation
    Signed the Tax Cuts and Jobs Act of 2017, reducing corporate tax rates from 35% to 21% and cutting personal income taxes.
  2. Trade Policy
    Implemented trade protectionism via tariffs, primarily on imports from China, starting a trade war.
  3. Economic Stimulus
    Signed the CARES Act, a bipartisan economic stimulus bill worth $2.2 trillion in response to the COVID-19 pandemic.
  4. Trade Policy
    Enacted a series of steep protectionist tariffs affecting nearly all imported goods, raising the effective tariff rate to an estimated 27% by April 2025.
  5. Tax Legislation
    Signed the One Big Beautiful Bill Act, which made the 2017 tax cuts permanent and added further deductions, projected to increase the budget deficit by $3.4 trillion by 2034.
  6. Governmental Reform
    Ordered the review and reclassification of many career civil service positions to at-will status, leading to mass terminations of federal employees.

Related Positions

  • Tax Cuts and Jobs Act of 2017 (TCJA) This was the signature legislative achievement of his first term, permanently extended in his second term.
  • Tariffs on International Trade He uses high, near-universal tariffs as a primary tool of economic and foreign policy in both terms.
  • Deregulation A consistent goal across both administrations to reduce federal regulations, particularly concerning the environment and business.
  • State Capitalism His second term involves shifting away from traditional free-market orthodoxy by taking direct government equity stakes in corporations.

Criticism

CBO (Congressional Budget Office)

Projected that extending the tax cuts via the 'One Big Beautiful Bill Act' would increase the budget deficit by $4.5 trillion over ten years (under earlier projections) or $3.4 trillion by 2034 (under the Act).

Economists (various)

Criticized the campaign agenda for potentially leading to an increase in inflation and adding around US$15 trillion to the national debt.

Economic Policy Institute (EPI)

Argued that his policies in the second term undercut incomes for all but the wealthiest, slow job growth, and make life less affordable by weakening worker leverage.

Economists/Experts

Stated that US tariffs are fees paid by US importers of foreign goods, contradicting the argument that foreign countries pay them, and noted that previous tariffs led to stock market volatility.