Four Key Economic Takeaways From Trump's Inaugural Address

President Donald Trump's second inaugural address laid out a vision for the U.S. economy, focusing on fighting inflation, promoting oil drilling, and deporting unauthorized immigrants. Here are four key economic takeaways from his speech:

1. Tariffs on Foreign Trade
Trump announced his intention to establish an "External Revenue Service" to collect tariffs on goods imported from other countries. This move is part of his "America First" economic agenda, which includes imposing high tariffs on foreign trade, including on Mexico, Canada, and China. However, many economists argue that the cost of tariffs is not external, as merchants typically pass the cost of import taxes on to U.S. consumers. This means that American consumers would likely face higher prices for goods imported from other countries, which could strain household budgets, especially for low- and middle-income families.



2. Fighting Inflation
Trump vowed to use the power of his office to bring down inflation, which was a major factor in his victory over former Vice President Kamala Harris in November. He plans to direct all members of his cabinet to marshal the vast powers at their disposal to defeat what was record inflation and rapidly bring down costs and prices. As of December, the cost of living had increased 2.9% over 12 months as measured by the Consumer Price Index, higher than pre-pandemic levels and the Federal Reserve's goal of 2% annual inflation but well below the 9.1% rate in June 2022, which had been a four-decade high (though not an all-time record).



3. Promoting Oil Drilling
Trump said reducing energy costs was a key to fighting inflation. Prices for gasoline, natural gas, and electricity are major factors in household budgets as well as measures of inflation such as the CPI. Trump said he would issue executive orders to promote domestic oil production, and reverse Biden policies promoting green energy and electric cars. He also declared a "national energy emergency" and vowed to "drill, baby, drill." However, promoting oil drilling could have significant environmental and economic consequences, including air and water pollution, habitat destruction, and market volatility.



4. Deporting Immigrants
Trump said he would issue executive orders on immigration, a major focus of his campaign rhetoric, including deporting immigrants. He said he would declare a national emergency at the southern border, deploy the military to stop illegal immigration, and remove unauthorized immigrants who are already in the country. However, deporting unauthorized immigrants could have a profound effect on the economy, especially industries such as homebuilding, where unauthorized immigrants make up a large portion of the workforce. Additionally, mass deportation could result in a $1.7 trillion loss in economic output over a decade, according to the Center for American Progress.



In conclusion, Trump's inaugural address outlined a vision for the U.S. economy that includes tariffs on foreign trade, fighting inflation, promoting oil drilling, and deporting unauthorized immigrants. While these policies may have some short-term benefits, they also carry significant risks and potential consequences that should be carefully considered.