United States President Donald Trump marked his first 100 days in office on Tuesday, a symbolic milestone observed in the U.S. to gauge a president’s early headway on fulfilling their campaign promises. Here, the Financial Post looks at Trump’s progress and his effect on key economic issues to date.
Trade and tariffs
For years, Trump has repeatedly claimed the U.S. was being “ripped off” by other countries through what he perceives as unfair trade practices. During his presidential campaign, he promised to levy sweeping tariffs on foreign-made goods in a bid to revive American industries and encourage U.S. investment.
Trump followed through on his tariff promise — though the process hasn’t exactly been straightforward. Since he first announced his tariff plans for Canada and Mexico, there have been two 30-day reprieves, the imposition of 25 per cent tariffs on Canadian goods (10 per cent on energy products), an exemption on CUSMA-compliant goods, and further tariffs on steel and aluminum and foreign cars.
Then came the expansive global reciprocal tariffs announced on April 2 (so-called “Liberation Day”), which were then paused and reset for 90-days after a week of steep declines in the stock and bond markets.
Trump’s aim with the tariffs is two-fold: reshore and rebuild America’s manufacturing sector, and help fund his signature tax cut agenda.
On the first point, economists estimate it would take years for the U.S. to disentangle itself from a hyperconnected global economy and even longer to rebuild domestic production. They also question whether such a complex and lengthy undertaking would result in enough number jobs to make it worthwhile.
Revenue-wise, the U.S. Treasury Department collected an additional US$6.3 billion from tariffs in April, a tiny fraction of its overall revenue of US$4.9 trillion last year — US$2.4 trillion of which came from income taxes.
Trump has also floated the idea that tariffs could replace income taxes, an idea that Tax Foundation senior economist Erica York told CNN is “absurd” and “mathematically impossible.” According to the Financial Times, “at the current rate of $16 billion in monthly tariff collection, it would take 150 months, or more than 12 years, to replace the annual revenue generated by the income tax.”
A Barron’s analysis also noted that “fully replacing income taxes would require an average tariff rate of 74 percent — a level economists say would effectively sever the U.S. from global trade.”
Inflation
The U.S. headline inflation rate hit a 40-year high in June 2022, rising to 9.1 per cent, amidst surging commodity prices due to supply chain issues related to the global pandemic and war in Ukraine.
At a 2024 Montana campaign rally, Trump promised to “end inflation” and “bring down the prices of all goods” starting on his first day in office. The country’s annual inflation rate sat at three per cent when Trump took office in January, decreasing to 2.8 per cent in February and further to 2.4 per cent in March.
Of course, this was all before tariffs took root. U.S. Federal Reserve chair Jerome Powell said in an April 16 speech at that Economic Club of Chicago that tariffs are “highly likely to generate at least a temporary rise in inflation,” though the inflationary effects could be “more persistent.”
“Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored,” Powell said.
Stock market
“The next Trump economic boom will begin on November 5, 2024. It’s going to be a boom like no other,” Trump promised on the campaign trail. It was an ambitious assurance, considering the S&P 500’s two-year bull run that notched gains of 24 per cent in 2023 and 23 per cent in 2024.
Traders were initially stoked about Trump’s pro-growth and pro-business agenda. But markets don’t like uncertainty, and the president’s unpredictable trade war policies have translated into market volatility.
It’s been a bumpy ride, with the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all posting their biggest losses since 2020 after Trump announced his reciprocal tariff plan on April 2. Overall, the S&P 500 has declined eight per cent since Trump’s inauguration on Jan. 20.
Taxes
Trump introduced a major tax code overhaul during his first term, which included reducing federal tax rates for corporations and individuals, raising the standard deduction and eliminating the personal exemption starting in the 2018 tax year.
Most of the tax cut provisions for individuals will expire at the end of 2025, but Trump has pledged to make the cuts permanent. He has also promised to get rid of taxes on tips, overtime pay and Social Security payments for retirees.
House Republicans approved a budget framework on April 10, which broadly outlined the planned tax and spending cuts but was short on details. The Republicans gave themselves a deadline of two months (to July 4) to get the full budget bill passed through both legislative chambers.
It’s expected that Trump and his allies will face considerable pushback along the way. Democrats and moderate Republicans are already uneasy about potential cuts to Medicaid, the federal- and state-funded insurance program for lower-income adults, which the non-partisan Congressional Budget Office said would likely be necessary to offset the nearly US$4 trillion in tax cuts.
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