If Trump wins, Australia’s economy tanks
More economic pain would be delivered to the US by the combination of Trump’s other proposals, particularly the former president’s threat to intervene in the operations of the US Federal Reserve.
The modelling suggested the US economy would be between 2.8 per cent and 9.7 per cent smaller than it would be otherwise by 2028, and smaller than it is today.
‘While Trump promises to make the foreigners pay, it is the US that will suffer the most under these proposed policies.’
Analysis authors
“We find that ironically, despite the ‘make the foreigners pay’ rhetoric, this package of policies does more damage to the US economy than to any other in the world,” the economists said.
“Under the more extreme scenario, the US economy will be in a similar state (apart from mortality rates) to the worst of the COVID-19 pandemic experience by 2028, but the rebound will be much smaller.
“In sum, while Trump promises to make the foreigners pay, it is the US that will suffer the most under these proposed policies.”
Intervening in the Federal Reserve’s operations would actually boost most other countries. Australia’s GDP would be around 0.5 percentage points stronger than it would be otherwise.
But for Americans, inflation would be substantially higher, with the economists estimating that by 2028 it would be between 20 and 28 per cent above the level it would be without Trump’s intervention.
Trump has said he will round up undocumented workers and undertake the largest mass deportation from the US since the 1950s.
According to the analysis, removing 1.3 million workers would reduce American GDP by 1.2 per cent more than would have occurred otherwise, while almost every other developed nation would be either unaffected or enjoy a small lift.
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If Trump managed to deport 8.3 million workers, as his full policy would suggest, the American economy would be 7 percentage points smaller than if the workers had remained. Even by 2040, the American jobs market would not have recovered from Trump’s plan.
Australia would be relatively unscathed by the deportation of workers, while some of the biggest winners would be nations such as Turkey and Russia.
But the combination of the tariffs, mass deportation of workers and Federal Reserve interference would leave Australians worse off.
The economists estimated America would in effect be in a deep recession within two years if all Trump’s policies were put in place, with much lower GDP, much higher inflation and far fewer people holding down a job.
“Donald Trump portrays the US as the victim of perfidious foreigners. He proposes to right the scales through a policy of mass deportations, trade protection and influence over the Fed,” the authors noted.
“[However] the policies negatively impact US firms and households, with different sectors of the economy being hurt differently depending on the policy.”
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