According to a survey of economists by the Financial Times, Trump's protectionist policies to implement "America First" economic policy will harm economic growth in the USA. This conclusion sharply contrasts with voters' optimistic attitude towards the plans of the presidential candidates.

A survey of more than 220 economists in the USA, United Kingdom, and Eurozone regarding the economic impact of Trump's return to the White House shows that most respondents believe the downsides of Trump's trade protectionism will outweigh the benefits of his "MAGA economics."

Many American economists surveyed by the UK Financial Times and the University of Chicago Booth School of Business also believe that a new term for Trump will stimulate inflation and lead the Federal Reserve to be more cautious in cutting interest rates.

Şebnem Kalemli-Özcan, a professor at Brown University and a member of the New York Fed Advisory Committee, stated: "Trump's policies may bring some growth in the short term, but it will come at the cost of a global slowdown, ultimately harming the USA. His policies will trigger inflation both in the USA and around the world, so we will enter a world of stagflation."

However, most economists, including those from the International Monetary Fund, OECD, and European Commission, predict that growth in the USA will be stronger than in Europe by 2025.

Since the COVID-19 pandemic, the growth rate of the USA's economy has outpaced that of the Eurozone, growing at an annualized rate of 2.8% in the third quarter of last year.

Trump has not released a comprehensive economic policy program, leaving analysts to predict his outlook based on promises and threats made during the campaign. These policies include imposing universal tariffs of up to 20% on all US imported products, mass deportation of illegal immigrants, streamlining procedures, and making the tax cuts from 2017 permanent. Trump calls himself a "tariff man" and has long believed that the USA needs to reduce its trade deficit and promote domestic production.

Janice Eberly from Northwestern University, a former senior Treasury official in the Obama administration, stated: "The announced policies include significant tariff increases and the expulsion of immigrant workers, both of which are likely to cause inflation and may negatively impact economic growth."

Overall, more than half of the 47 American economists surveyed expect Trump's agenda to have "some degree of negative impact" on the economy, while one-tenth predict there will be "a significant negative impact." On the other hand, one-fifth of respondents anticipate a positive effect.

The pessimism among economists contrasts with investors' optimism regarding Trump's second term.

In the weeks following Trump's victory, the US stock market soared, although the rise moderated after the Federal Reserve hinted in December that it would reduce the number of interest rate cuts this year. As one of the best-performing years of the century, the S&P 500 Index gained 23.3% in 2024.

Bank of America strategist Benjamin Bowler stated this week that Trump's "free-market economics, tax cuts, and deregulation," combined with a potential "AI revolution," mean that this wave of gains may continue into 2025.

Another survey by the Financial Times shows that Eurozone economists are more pessimistic about the impact of Trump's policies, with 13% of analysts expecting a significant negative impact and 72% predicting some negative consequences.

For the Eurozone, economists are primarily concerned about manufacturing production, particularly in Germany, the region's largest economy.

Martin Wolburg, a senior economist at Generali Investments, pointed out that the country's auto industry could become a particular target of Trump.

Although the United Kingdom is considered more resilient to the impact of tariffs due to its large service sector, CBI Chief Economist Alpesh Paleja warned that if tariffs drag down growth in the Eurozone, the UK will face a 'second-round shock.'

In the UK, 56% of nearly 100 respondents expect some negative effects, with many mentioning the drag on sentiment due to uncertainty before Trump's inauguration on January 20. Just over 10% predict some positive effects.

PwC UK's Chief Economist Barret Kupelian stated, "The Trump administration will become an 'unpredictable machine,' which will prevent businesses and households from making long-term decisions easily. This will inevitably lead to economic losses."

Editor/lambor