Days away from the first ballots cast in the 2024 primary election, former President Donald Trump holds a commanding lead over his Republican rivals and tops President Joe Biden in some head-to-head polls.
Trump’s standing appears to stem in part from widespread frustration over Biden’s handling of the economy. Only 30% of voters approve of what Biden has done on that issue, according to an ABC News/Washington Post poll from the fall.
While such voter sentiment has drawn significant attention, less focus has been paid to what Trump plans to do if he takes the reins of the economy next year.
The Trump campaign did not immediately respond to ABC News’ request for comment.
Here’s what to know about Trump’s economic proposals for a potential second term and how some economists view them:
Trade
Trump plans to ratchet up a confrontational trade policy instituted during his first term, promising to impose tariffs on most imported goods.
Speaking with Fox Business in August, Trump said the tax on imported items could ultimately stand at 10%.
Trump also plans to tighten constraints on China-made products, including a “4-year plan to phase out all Chinese imports of essential goods,” according to a set of proposals released in February.
Stephen Moore, who previously served as an economic adviser to Trump and says he has helped shape Trump’s 2024 agenda, told ABC News that the tariff policies would hinder foreign producers and make domestic industries more competitive.
In turn, the policy would create jobs and boost manufacturing in the U.S., Moore said.
“Trump wants jobs here in America,” Moore added. “He wants things made in America.”
Many economists, including Moore, believe that a near-universal tariff would raise the prices of many consumer goods, however.
The price increases would primarily hurt low- and middle-income households, since consumer spending makes up a disproportionately large share of their expenses, Alan Blinder, a professor of economics at Princeton University and a former member of the Council of Economic Advisors under President Bill Clinton, told ABC News.
Gregory Daco, chief economist at global consulting firm EY, noted that the elevated prices could also weigh on consumer spending and in turn slow economic growth. Plus, he added, the potential shift toward American manufacturing would carry sizable up-front expenses.
“There’s no such thing as a free lunch,” Daco told ABC News. “It takes time to build factories and it costs a lot.”
Tax cuts
The revenue generated by a sweeping set of tariffs would allow the Trump administration to reduce taxes for individuals and companies, the Trump campaign said in February.
But the details of a tax cut proposal remain uncertain, Moore said. “This is all in motion,” Moore added. “Nothing has been decided.”
Trump is committed, however, to extending the tax cuts signed into law during his first term when they begin to phase out in 2025, Moore added.
“He clearly wants to make sure the tax rates don’t go up as they’re supposed to do if they let his tax plan expire,” Moore said.
President Donald Trump signs a tax-overhaul bill into law in the Oval Office of the White House, Dec. 22, 2017.
Mike Theiler/Pool via Bloomberg via Getty Images
However, a recent report by the nonpartisan Congressional Budget Office, or CBO, said that making permanent the provisions of the Tax Cuts and Jobs Act of 2017 would add $3.5 trillion to the nation’s deficit.
The U.S. currently holds roughly $31.4 trillion in debt. In a report in February, the CBO projected the federal debt will grow nearly $20 trillion by the end of 2033.
“Extending the tax cuts would only worsen the already deep budget deficit problem that we’re dealing with,” Blinder said.
While the economy registered strong growth over the year after Trump’s tax cut took effect, the measure accounted for little or none of the performance, according to a study from the nonpartisan Congressional Research Service in 2019.
“The tax cuts did not create investment or productivity miracles,” Blinder said. “Nobody should’ve expected that they would.”
Energy
Trump has vowed to slash U.S. energy and electricity costs by ramping up domestic production of fossil fuels.
On the campaign trail, Trump has summed up this approach with a slogan: “Drill, baby, drill.”
The agenda includes tax breaks for producers of oil, gas and coal.
Trump also plans to do away with much of the $369 billion Inflation Reduction Act, the largest climate measure in U.S. history, which includes incentives for clean energy projects and the purchase of electric vehicles, the Financial Times reported in November.
Under Biden, meanwhile, the U.S. set a record for oil output this year. As of December, the country was on pace to increase its supply of oil by an average of 1.4 million barrels per day, according to the International Energy Agency, a government group.
Blinder, of Princeton, questioned a potential expansion in production of fossil fuels, which make up a key driver of climate change. Economic policy should strike a balance between productivity and environmental concerns, Blinder said.
“One basic principle of taxation is you want to tax bad things and subsidize at least some good things,” he added. “I find it hard to see that with providing tax breaks for fossil fuels.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
