Global alert: Other countries should steer clear of Trumponomics

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Subscribe to enjoy similar stories. Given Donald Trump’s nominees for key cabinet positions so far, it appears that the US president-elect is determined at least to try to deliver on many of his campaign promises. If so, the current news cycle may have come as a welcome surprise to those who have grown tired of elected leaders making promises they have no intention of keeping.

But as a longtime student and practitioner of the dismal science (economics), I see no reason to believe that Trump’s policies will do what he and his supporters think they will do. For example, aggressively enforcing a country’s immigration laws might well be a good idea. But aggressively pursuing illegal immigrants who are already in the country is another matter, and if it is done in a way that discourages immigrants more broadly, the United States could lose one of the key advantages that it has over many of its advanced-economy peers.

With demographic trends putting downward pressure on the populations of Europe, Japan and many other countries, the US must be careful to not join them. Additional workers who can preserve the size of the labour force need to be found somewhere. Or consider Trump’s two other major campaign promises: Significant tax cuts and new 10-20% tariffs on imports from the rest of the world, with the rate rising to 60% for goods from China.

While it is easy to find economists who will disagree with each other on just about any economic-policy question, tariffs might be the one big exception. Few economists think they are a good idea, mainly because there is zero evidence that they can help reduce a country’s trade deficit. Worse, all the additional costs and other negative consequences that they produce are well known.