How Trump could reshape US policies and politics in 2025

HOUSTON - United States (US) President-elect Donald Trump has high expectations from American voters after being elected to his second term in the White House, but the journey to achieving those goals will be challenging from the moment he is sworn into office on Jan 20, Anadolu Agency (AA) reported.

The economy was the number one issue facing Americans during Trump's presidential campaign, specifically inflation and high prices at the grocery store.

"They're going to be affording their groceries very soon," Trump said at a ceremony honouring him as Time Magazine's Person of the Year on Dec 12 in New York City.

But that may not be the case, at least not immediately, according to Ed Hirs, an energy fellow at the University of Houston's Department of Economics.

Trump has said he plans to slap tariffs of up to 25 per cent on goods imported from the United States' top trade partners, including Mexico and Canada.

If he follows through on his campaign promises to raise import taxes, Hirs told Anadolu that the result may end up being higher prices for American consumers.

"This is the component of tariffs that the Trump administration doesn't get. It's not a one-way free money type of situation or game or strategic move," said Hirs.

"If I raise the tariffs on Mexican products by 25 per cent and I'm a US manufacturer who now can raise his prices 25 per cent, that's what will happen."

Hirs said the United States, Mexico and Canada have a combined trade and investment price tag of about $1.8 trillion per year and pointed out that higher prices will go beyond food products and retail goods if Trump follows through on his tariff hikes to those countries.

"Canada is really important because we import about 4 million barrels of oil a day from Canada. A 25 per cent tariff on that is certainly going to hit every consumer across the nation, because, of course, the domestic producers will be able to raise their prices to match that," Hirs said.

While Trump boasted on the campaign trail that "when I win, I will immediately bring prices down, starting on day one," he seemed to temper those lofty expectations during his Time Magazine interview.

"It's hard to bring things down once they're up," he said.

"It's very hard...but I think that they will...I think a better supply chain is going to bring them down. You know, the supply chain is still broken."

Trump also believes the US immigration system is broken and has vowed to overhaul the country's immigration laws starting with mass deportations and ending birthright citizenship.

Republicans in Congress are also prioritising border security measures and creating new laws as part of an expected budget immigration package.

Hirs told Anadolu that mass deportations of millions of undocumented migrants would likely have a far-reaching effect on the US economy because it would reduce the overall workforce in sectors that require manual labour or jobs that the average American does not want to do, such as lawn care work or dishwashing and bussing tables at restaurants.

He pointed to jobs in the Permian Basin oil fields in western Texas as another example.

"Because out there, it's difficult to get workers who can take being out in the 120-degree (Fahrenheit/48.89 Celsius) heat, you know, on a long summer day working on oil rigs...and deporting them is going to instantly drive up the cost of finding replacement labour across the United States," he said.

When it comes to relations with China, Trump is aiming to mend fences after admitting recently that the Covid-19 pandemic in 2020 had strained his relationship with President Xi Jinping during his first term in the Oval Office.

"We had a very good relationship until Covid," Trump told reporters at his Mar-a-Lago resort in Florida, calling Xi his "friend" and saying that the Chinese president "is an amazing guy."

"Covid didn't end the relationship," Trump added. "But it was a bridge too far for me."

A trade war erupted between the United States and China during Trump's first term which uprooted global supply chains and hurt the American economy since the US is China's largest trading partner.

Economies across the globe were affected by the US-China trade war and inflation skyrocketed worldwide.

But Trump has indicated that he plans to pick up where he left off by ending China's most-favoured-nation trading status and slapping tariffs on Chinese imports anywhere between 60 per cent and 100 per cent, which could initiate another trade war and disrupt the American economy once again.

"If Trump goes ahead with his policy, including the 25 per cent tariffs for Mexico and Canada, there will be, and I'm choosing my words very carefully here, a sharp increase in inflation as you've never seen before," said Hirs, who pointed out what happened during Trump's first presidential term when the trade war escalated.

"As we know from the last time Trump attacked China with tariffs, China responded with not just higher tariffs on US goods, but stopped importing grain from the United States," he continued. "If that were to occur like it did last time, I mean, last time, we had two years of crops pile up across the farm belt."

Another global interest that Trump must address is climate change, a topic that he has called a fabrication by Democrats.

The focal point of this discussion is the Inflation Reduction Act (IRA), a law that is expected to reduce US emissions by about 40 per cent by 2030, with an investment of more than US$300 billion to reduce greenhouse gas emissions, initiate investments in clean energy and offer tax breaks for consumers and subsidies to manufacturers for products such as electric vehicles.

Trump has already threatened to repeal some of the measures passed in the bill, reinforcing his energy philosophy of "drill, baby, drill."

But since a lot of Republican congressional districts have already begun manufacturing projects to earn these tax credits, experts believe it will be difficult for Trump to roll back some of those clean energy policies for fear of a backlash from his Republican constituents, and with his appointment of Tesla CEO Elon Musk to head up the new Department of Government Efficiency (DOGE), removing those types of tax breaks does not appear likely.

"One of the foundation principles of finance is that volatility hurts markets, and volatility is the enemy of Wall Street, and whipsaw policies do not help the private sector or society in general," said Hirs.

"The data I've seen show that 80 per cent of the spending for the IRA is in red (Republican) districts...so you know, pulling that money out is what would have a serious impact on local economies that have been counting on that"

"Nothing the Trump administration can do can reverse the energy transition. They can slow it, but they can't reverse it," he continued.

Whether Trump will be successful in addressing all these issues is yet to be seen, but his agenda is stacked with critical domestic and international policies that need to be addressed immediately once he is inaugurated on Jan 20, and there is sure to be some type of scrutiny and backlash from his critics and allies alike, which is nothing new for the president-elect.

Ultimately, American voters will decide at the ballot box come the mid-term elections in 2026, which will once again determine the structure of power between Republicans and Democrats in Congress.

At that point, it will be clearer to evaluate whether Trump is dealing with these policies effectively. - BERNAMA-AA