In the days leading up to President-elect Donald Trump’s inauguration, Americans wait to see what the effect of new economic policies will look like over the next four years. 

By voting, people expressed their confidence that Trump can restore the low prices and economic stability they recall from his first term, as they are frustrated over still high prices, according to PBS News.

“(Trump) asserts that tariffs — basically import taxes — will create more factory jobs, shrink the federal deficit, lower food prices and allow the government to subsidize child care,” according to the Associated Press.

However, in a letter written in June 2024, 16 Nobel Prize-winning economists expressed their fear of the economic risks of a second Trump administration.

Policies at the forefront of Trump’s campaign include the deportation of millions of unauthorized immigrant workers and the implementation of tariffs on all imports “deemed critical to national or economic security,” according to The Washington Post.

There have also been discussions about increasing the president’s influence over the Federal Reserve.

According to a working paper published by the Peterson Institute for International Economics (PIIE), these policies would have a “negative impact” on the United States economy if put in place.

They are the basis for the research that PIIE conducted to predict the percentage change of gross domestic product (GDP), unemployment and inflation in the U.S.

GDP is a baseline measure for economic activity that estimates the total amount of final goods and services produced in a specific country, according to the Bureau of Economic Analysis.

If Trump’s policies were to be implemented, the real GDP would drop between 2.8% and 9.7% lower than the baseline, depending on the variability of the enacted policies, according to the PIIE. 

The U.S. would be producing goods and services worth $750 billion to $2.57 trillion less than what the predicted production value would be in 2028 if Trump’s policies were not enacted. In turn, the production of goods in the U.S. would decrease in the next four years, according to the graph pictured above.

The PIIE predicts that within the first year of Trump’s presidency employment would rise by 1.65% of the total U.S. population, meaning job opportunities would increase. 

However, by 2028 the employment level would fall between 2.7% and 9% below the predicted employment level, signaling fewer jobs and higher unemployment. 

According to PIIE, if Trump’s policies were to be implemented, by 2026 the inflation level would increase from between 4.1% and 7.4% higher than the PIIE predicted baseline, depending on how extreme the implementation is.

Based on the results of this study, Trump’s policies are contradictory to his own claims.

However, there is more information to be considered when analyzing policies like implementing tariffs. 

“Tariffs can be used to prevent countries from dumping, which is a predatory price strategy that is implemented to try and take control of the market for the given product,” according to Ting Yao Yan, an economic doctoral student and economics professor at the University of Kentucky.

Yao Yan said this could be done in an attempt to prevent monopolies from developing in certain product sectors.

“(When COVID-19 started) had the U.S. originally produced its own masks, there might not have been such a panic. So being able to produce your own goods promotes national security and minimizes reliance on other countries,” Yao Yan said.

When executed properly, tariffs can stabilize national security which encourages prosperity and production specifically in the U. S., according to Yao Yan.

“It’s a plan that’s going to bring up our worth, our value as a country. It’s going to make people want to be able to go and work and create jobs and create a lot of good, solid money for our country,” Trump said during the 2024 presidential debate.

As Trump’s inauguration approaches, because of the uncertain specifics of his economic proposals, it is important to remain aware as to how these policies will pertain to the average citizen, according to Thomson Reuters.