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Donald Trump's vision to reshape the world's largest economy with protectionist policies that put “America first” will hurt growth, according to Financial Times polls, which contrasts with investor optimism about the US president-elect's plans.
Surveys of more than 220 economists in the US, UK and Eurozone on the economic impact of TrumpTrump's return to the White House showed that most respondents believe his protectionist shift will overshadow the benefits of other elements that the president-elect called “maganum economics.”
Many US economists, who were surveyed jointly by the Financial Times and the University of Chicago Booth School of Business, believe that Trump's new term will stimulate… Economic inflation It leads to more caution from the Federal Reserve about cutting interest rates.
“Trump’s policies can bring some growth in the short term, but this will come at the cost of a global slowdown that will then come back and hurt the United States later,” said Şibnem Calimli Ozcan, a professor at Brown University who also chairs the committee. On the Economic Advisory Committee of the Federal Reserve Bank of New York. “His policies are also inflationary, both in the United States and the rest of the world, so we will move into a stagflationary world.”
However, most economists – including the International Monetary Fund, the OECD, and the European Commission – expect stronger growth in the United States than in Europe in 2025.
The US economy's growth has consistently outpaced its transatlantic counterparts since the coronavirus pandemic, expanding at an annual rate of 2.8 percent in the third quarter of last year.
Trump has not yet issued a comprehensive economic policy bulletin, leaving analysts to base their expectations on the pledges and threats he made during the election campaign.
These include plans to impose blanket tariffs of up to 20% on all US imports, mass deportations of undocumented workers, cut red tape and make permanent the tax cuts introduced in 2017.
Trump, a self-described “tariff guy,” has a long-standing and deeply rooted belief that the United States needs to close its trade deficit and boost domestic production.
“The policies announced include significant tariffs and deportations of migrant workers,” said Janice Eberle, a former senior US Treasury official in the Obama administration who now works at Northwestern University. “Both tend to be inflationary and potentially negative for growth.”
Overall, more than half of the 47 economists polled on the US economy specifically expect “some negative impact” from Trump’s agenda, and a tenth expect “a significant negative impact.” On the other hand, a fifth of those surveyed expect a positive impact.
The gloom among economists contrasts with investors' optimism about Trump's second term.
Standard & Poor's US stock index rose In the weeks following Trump's win, though, they pared some of those gains in December after US interest rate setters signaled they would make smaller rate cuts this year than previously expected.
In it The best two years of this centuryThe benchmark index ended 2024 up by 23.3 percent, after similar gains in 2023.
Benjamin Bowler, a strategist at Bank of America, said this week that Trump's “laissez-faire economics, tax cuts and deregulation”, coupled with a potential “artificial intelligence revolution”, mean the rally is likely to continue into 2025.
A separate poll conducted by the Financial Times showed that economists in the euro zone were more pessimistic about the impact of Trump's policies in their region compared to their counterparts in the United States, with 13 percent of analysts saying they expected a major negative impact, and another 72 percent expected some negative impacts. repercussions.
For the euro area, the main concern relates to industrial production, Especially in GermanyThe largest economy in the region.
Martin Wahlberg, chief economist at Generali Investments, highlighted the possibility that the country's auto industry could be “particularly targeted” by Trump.
Christophe Boucher, chief investment officer at ABN Amro Investment Solutions, said Trump's threat to impose a 60 percent tax on China “could pose a greater challenge to European industries” because it would increase the likelihood of Beijing flooding the region with cheap products.
While the UK is seen as better insulated from tariffs, thanks to its large services sector, Alpesh Baliga, chief economist at the Central Bank of Iraq, warned that the country would be vulnerable to a “second round effect” if tariffs impact growth. Eurozone.
In the UK, more than 56% of nearly 100 survey respondents expect some negative impact, and many speak of a negative impact on morale due to the prevailing climate of uncertainty ahead of Trump's inauguration on January 20. Just over 10% expected some positive impact.
“A Trump administration will be an ‘unpredictable machine’ that will discourage businesses and households from making long-term decisions easily,” said Barrett Kopelian, chief economist at PricewaterhouseCoopers UK. “This will inevitably have an economic cost.”
