Presidential candidates sometimes use vague language, making promises they cannot fulfill and proposing policies without providing detailed explanations.

Trump may use language as a negotiation strategy, and Congress may block the implementation of certain policies, but Trump has clearly stated his position on issues such as tariffs, immigration, the budget, and the independence of the Federal Reserve. Each of these situations will make the work of the Federal Reserve more difficult.

Tariffs

When speaking at the New York Economic Club last Thursday, Trump said, "We will bring back tremendous growth. Remember, we are also imposing a certain percentage of tariffs. Today, I will not disclose the specific percentage, but it will be a higher tariff rate than what people have heard in the past. We will bring billions of dollars in funds, which will directly reduce our deficit."

Based on this answer, Evercore ISI's estimate in the chart seems to be a reasonable summary of Trump's policies - that a significant increase in tariffs will raise import taxes to levels not seen since the Smoot-Hawley Tariff of the 1930s.

If Trump wins the election, tariffs will fall almost entirely on American importers, which is contrary to Trump's claims. In short, the American people will bear the cost.

Very high tariffs will shift trade and reduce imports, but will also increase inflation. Goldman Sachs estimates that 70% of the tariff pass-through to US consumers, for every 1 percentage point increase in effective tariff rates, prices will rise by 0.1 percentage point.

Other countries will take retaliatory actions, affecting US economic growth.

Expelling immigrants.

Trump hopes to end the recent surge in net immigration and implement the 'largest deportation operation in US history.'

As documented in estimates by the non-partisan Congressional Budget Office, since the outbreak of the COVID-19 pandemic, the US has experienced a significant surge in net immigration, including authorized and unauthorized immigrants.

The Congressional Budget Office is responsible for estimating the impact of immigration waves on the economy, estimating that net immigration has a significant positive impact on the US public finances because immigrants pay more in taxes than they receive in mandatory public expenditures.

The recent cooling of the labor market and the suppression of inflation have been caused by the immigration wave.

Large-scale deportation of immigrants may have the opposite long-term economic effect, almost certainly causing short-term supply shortages for sectors of the US economy that currently rely on immigrants. Therefore, this is primarily an inflation issue for the Federal Reserve.

Fiscal easing

In addition to increasing the US budget deficit in a more hostile environment towards immigrants, Trump also wants to reduce the corporate tax rate to 15% and make permanent the tax cuts he introduced in 2017.

The results of the congressional elections are clearly important for fiscal policy, with thousands of possible outcomes, but undoubtedly Trump's intention is to implement a looser fiscal policy than now, looser than Harris hopes for.

Scholars at the University of Pennsylvania have simulated Trump's and Harris's policy proposals on a static and dynamic basis. According to the Penn Wharton Budget Model, Trump's proposal transitions better from static to dynamic than Harris's, but is overall looser, which will eventually lead the Federal Reserve to implement tighter monetary policy when interest rates are too low.

It should be noted that not all analyses come to this conclusion, as they take into account factors such as Congress and tariffs. For example, Goldman Sachs believes that regardless of the presidential election results, fiscal easing will be minimal. However, this result contradicts recent election cycles.

Independence of the Federal Reserve

In August, Trump firmly stated that his 'intuition' about monetary policy is better than the Federal Reserve's and that he needs 'at least a say' in setting interest rates.

After causing a lot of anxiety, he later told Bloomberg in the same month that he might talk about interest rates because he 'believes he has a good intuition', but 'that does not mean I'm giving orders, nor does it mean the Fed has to listen to me'.

Inflation Consequences

Increasing tariffs and loose fiscal policy are both inflationary, and the policy of expelling immigrants will at least lead to supply issues in the short term. Coupled with a president who blames the Fed's monetary policy for destroying the US economy, this creates a tense situation and a recipe for runaway inflation.

This is much more serious than the consequences of potential price controls under a Harris-led administration.