Similarly, Trump’s promised deportation of illegal aliens may raise prices by causing a shortage of workers and thus higher prices in some immigrant-dependent industries. But let us say that 2 million workers were deported — which we think would be a high number. In a country with a labor force of 168 million, this wage-push inflation is likely to be small. In addition, if wages rise, the effect on real wages for U.S. workers from price hikes is reduced.
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But here is what the inflation hawks are missing. Any pressure on prices from deportations and tariffs are likely to be more than offset by other Trump economic policies that will put downward pressures on overall inflation. Policies that make the American economy more productive are the best antidote to inflation.
O’Leary Ventures Chairman Kevin O’Leary shares whether he’s concerned about President Donald Trump’s tariffs on steel and aluminum, the fate of the U.S. penny and the handling of the TikTok sale.
Trump is suggesting slashing income tax rates to 15% on made-in-America products. DOGE cost cutting and caps on federal hiring will make government products and services less expensive. And perhaps most importantly, reducing onerous regulations will cut costs and prices.
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More drilling and mining will make energy and minerals less expensive. Trump’s push for health care price transparency will make medical consumers more attentive to costs and put downward on prices. Trump’s call for legal immigrant worker visas will offset losses of illegal alien workers.
Those who warn of runaway inflation under Trump ignore all the Trump policies that are disinflationary. They forget that Trump was already president for four years and the annual inflation rate from many of the same policies he is talking about now was 1.9% or slightly less than the Federal Reserve’s 2% inflation target.
One prediction you can take to the bank: if Trump can win spending cuts from Congress anywhere near what he is proposing, inflation is going to look a lot more like the low levels in his first term than the blizzard of inflation under Bidenomics.
Stephen Moore is a visiting senior fellow at the Heritage Foundation. Tomas Philipson is an economist at the University of Chicago and served as chairman of the Council of Economic Advisers under President Donald Trump. Moore is co-founder and Philipson a visiting research fellow at Unleash Prosperity.
