"Inflation nightmare"

Trump’s promises could come back to haunt him

Donald Trump's plans could also backfire badly, warn numerous experts.

(Bild: ASSOCIATED PRESS)

The frustration of people in the US over high prices is likely to be one of the main reasons why Donald Trump won the presidential election and will return to the White House in January. The Republican has promised to end the "inflation nightmare".

However, his bold promise could become a major problem for the 78-year-old. Because his plans could drive prices even higher. What are Trump's economic policy plans?

During the election campaign, Trump announced far-reaching tariffs - at least 60 percent on goods from China and up to 20 percent on goods from other countries. Tariffs are a kind of surcharge on imported goods. They are payable at the border when a company or consumer in the USA buys the product from abroad. Trump argues that his tariff policy will lead to US companies producing more in the USA again. This would create jobs. It is the classic "America First" policy that Trump already pursued during his first term in office.

The high prices are a heavy burden on the wallets of US citizens.

(Bild: ASSOCIATED PRESS)

Democratic US President Joe Biden also relied on protectionism. He has not only largely retained Trump's China tariffs, but has also imposed new tariffs - on electric cars, for example. While Biden has focused relatively specifically on certain industries, the tariffs announced by Trump are more far-reaching.

Foreclosure policy could drive prices up further
Many experts fear that this foreclosure policy will lead to higher prices. This is because many goods from abroad cannot be produced in the USA overnight. Companies are therefore still dependent on imports from abroad for production - import duties then increase the cost of these goods. It is expected that companies will simply pass these costs on to consumers. In addition, China and Europe are likely to respond with counter-tariffs - which in turn is bad news for US companies that export a lot.

(Bild: ASSOCIATED PRESS)

Tax exemption for tips and overtime
Numerous tax breaks that Trump passed during his first term of office will not expire until next year. Trump wants to extend these tax breaks - for example on income tax. He has also held out the prospect of further reducing corporation tax. One of his best-known campaign promises is the tax exemption for tips and overtime. The salaries of employees in the service industry are often so low that tips make up the majority of their pay. The Republican has also promised that seniors will no longer have to pay taxes on their monthly retirement benefits.

Fifth Avenue, Manhattan, New York

(Bild: APA/Getty Images via AFP/GETTY IMAGES/Michael M. Santiago)

Trump could cause bigger deficits and more inequality
Trump and the Republicans argue that the tax cuts will be offset by the resulting boost to the economy. Others fear that the national debt will increase. The US national debt currently stands at just under 36 trillion US dollars (around 34 trillion euros). An analysis by the non-partisan tax organization Committee for a Responsible Federal Budget concludes that Trump's tax plans could increase the US debt by USD 7.5 trillion over the next ten years.

Sentiment could tilt quickly
The falling inflation rate does play into Trump's hands. However, if prices rise rapidly again due to his protectionist economic policy, the mood in the country could turn. In any case, more than 20 Nobel Prize winners in economics warned last month that Trump's policies, "including high tariffs even on goods from our friends and allies" and tax cuts, "will lead to higher prices, bigger deficits and greater inequality". If that happens, it could be difficult for Trump and the Republicans.