As the possibility of Trump's election victory continues to increase, the market is concerned about the global inflation impact of his "America first" policy.

Recently, several analysts from Wall Street research institutions have warned that Trump's policy of "high tariffs + low taxes" in his first presidential term is inflationary in nature and that "Trump 2.0" will only exacerbate the problem.

"Trump's policies may be more inflationary in his second term than in his first," said Michael Metcalfe, head of macroeconomic strategy at State Street Global Markets, in an interview with CNBC. "Compared to 2016, when inflation rates were low and inflation expectations were low...2024, 2025 will be very different. Inflation levels will be higher, inflation expectations will be higher, and we will still be in this inflationary mindset."

The policy of "high tariffs" is often seen as a driver of inflation because it increases the cost of imported goods, allowing domestic producers to raise prices and increase consumer payment pressure. At the same time, tax cuts can stimulate consumer spending, further pushing up the cost of goods and services.

A recent survey of economists showed that most people believe that inflation will rise under Trump's leadership due to his "hardline protectionism" stance. This upward trend in inflation could not only affect the United States, but also spread to Asia and Europe.

Gareth Nicholson, an analyst at Nomura Securities, said that if Trump is re-elected, "macroeconomically speaking, this will lead to global inflation (and may even be stagflation), and will accelerate more supply chain shifts within Asia."

Although the latest CPI data released by the United States shows that inflation has cooled down, with the June CPI turning negative on a month-on-month basis for the first time in four years and the core CPI's year-on-year growth rate hitting a new three-year low, the market is still concerned about the inflation risks that Trump's policies might bring.

On the eve of the first debate between Trump and Biden, Trump accepted an interview with the media. Trump said in the interview that "Trumponomics" = "low interest rates + low taxes," and he hopes to lower the corporate tax rate to 15%.

He also stressed that high tariffs are wise and have benefits for negotiations. Regarding inflation and interest rate cuts, Trump said he would explore more oil exploration to lower energy prices and does not want to cut interest rates before November to boost the economy during Biden's term. Analysts believe that Trump's policy is focused on "rising inflation expectations."

16 Nobel laureate economists recently issued a joint letter warning that if former President Trump wins the November election, his economic proposals will reignite inflation and cause lasting damage to the global economy.

Edited by Jeffrey