How a Trump Win in 2024 Could Impact Inflation in 2025
Written by
Vance Cariaga
Edited by
Zuri Anderson
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One of the cornerstones of former president Donald Trump’s plan to bring down inflation is to ramp up oil and gas production, which he said will drastically reduce energy and other consumer costs.
In an interview earlier this month with financial podcaster Dave Ramsey, Trump blamed the Biden administration for the “highest inflation we’ve ever had” and suggested that “people are getting wiped out like never before.”
Trump briefly amended those comments by saying inflation is the “highest in 48 years” rather than “ever.” However, he continued to attack the record of President Joe Biden and Vice President Kamala Harris, his Democratic opponent in the 2024 election.
But many economic experts and researchers are skeptical about the GOP candidate’s plan while also warning that other Trump proposals could increase inflation in 2025 should he win a second term in November. Here’s what they had to say.
Digging More Oil To Reduce Energy Costs
One of Trump’s answers is to “drill baby drill,” which has become the catchphrase for cranking out more domestic oil and gas. He claimed that doing so would greatly reduce energy costs.
“I believe I’ll be able to get energy down to 50% of what it is right now within a period of less than a year,” he told Ramsey.
Those comments were in line with earlier comments Trump made at a political rally in North Carolina, Politico reported.
“At the center of our effort to bring the cost of living under control will be the all-out push to end the Biden-Harris war on a thing called American energy,” Trump said at the event. “American energy, we will drill, baby, drill. We’re going to bring energy prices down.”
Certainly, U.S. consumers would benefit from lower gasoline, heating and electricity costs. Whether Trump’s plan will accomplish that is up for debate, however.
As The Wall Street Journal noted in a recent article, energy prices are shaped by “complex global and regional markets that don’t respond quickly to executive orders.” Factors such as the weather and global conflicts typically have a much bigger impact on electricity and other costs than White House policy.
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“It’s mostly just bluster, because the president actually doesn’t have any direct control,” Michael Webber, a professor of energy resources at the University of Texas at Austin, told The Wall Street Journal.
Even though gas prices have been higher under Biden than under Trump, it’s not for lack of production. Fossil fuel production is “already at record levels” under Biden, Politico reported, adding that “oil and gas prices are largely out of the hands of a president.”
Increasing Tariffs
Meanwhile, other Trump policies could actually increase inflation, experts say — especially his support for tariffs.
Many economists opposed high tariffs on imported goods that are much cheaper to source overseas and cheaper to sell here.
According to an analysis from the Tax Policy Center, Trump’s tariffs “would increase consumer prices on imported goods and, perhaps, on domestic products that compete with them.”
A separate report from the Peterson Institute for International Economics suggested that Trump’s policies could cause the U.S. inflation rate to climb “between 4.1 and 7.4 percentage points higher than otherwise by 2026.”
Crack Down on Workers Living in the U.S. Illegally
Another policy that could lead to higher inflation is Trump’s desire to crack down on workers living in the U.S. illegally and deport them en masse.
“Deporting millions of immigrants now living and working in the U.S. and closing the borders to new immigrants, as Trump promises, would reduce the supply of workers,” the Tax Policy Center (TPC) noted. “That would compel employers to pay higher wages to those still in the labor pool, leading to higher prices and more inflation.”
At the same time, the effects of a smaller labor pool “might be somewhat offset” by shrinking demand for goods and services as the population of immigrant consumers declines,” the TPC added.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. For more coverage on this topic, please check out Dave Ramsey Disagrees With Kamala Harris’ Inflation Plan — What Do Others Think?
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