Kaushik Basu: What if Trump actually keeps his campaign promises?

livemint.com:

Subscribe to enjoy similar stories. As the dust settles after one of the most turbulent presidential elections in American history, many are asking whether US president-elect Donald Trump will deliver on his economic agenda and—assuming he follows through on his campaign promises—what impact his policies will have on the United States and rest of the world. On the campaign trail, Trump repeatedly pledged to create manufacturing jobs by imposing a 10% tariff on all imports and up to 60% on Chinese goods.

He also vowed to punish American companies that produce goods overseas, deport millions of undocumented immigrants and make it harder for migrants to enter the country and compete with American workers. At first glance, Donald Trump’s vision of a “manufacturing renaissance" may seem appealing. Given the election’s outcome, it has clearly resonated with voters.

Financial markets also reacted positively: after the election was called, the dollar rose against most major currencies and the S&P 500 recorded its largest weekly gain in a year. But the reality is not as rosy as it may seem. The stock-market rally is primarily driven by expectations of significant tax cuts and deregulation.

Plans to raise taxes on the super-rich and large corporations, a centrepiece of Vice President Kamala Harris’s campaign, will be shelved, at least for now. When it comes to Trump’s plans to restrict the flow of goods and people, experts remain far less optimistic. A recent Peterson Institute paper by Kimberly Clausing and Mary Lovely examines the potential consequences of Trump’s proposed trade barriers, warning that his import tariffs will lead to higher prices, with the burden falling disproportionately on low- and middle-income households.