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Nov 13, 2024

How will Trump’s policies impact your wallet? UHERO expert weighs-in

HONOLULU (KHON2) — We’re now less than 70 days away from the inauguration of President-Elect Donald Trump, which will bring new policies to the nation. Among the many proposals that could impact

HONOLULU (KHON2) — We’re now less than 70 days away from the inauguration of President-Elect Donald Trump, which will bring new policies to the nation.

Among the many proposals that could impact Hawaii are tariffs. University of Hawaii Economic Research Organization Executive Director Carl Bonham joined Wake Up 2Day on Tuesday to share his thoughts on how they could affect your wallet.

“So a tariff is a tax that is legally imposed on a company that’s importing goods that are made outside of the country. And so that’s who legally, pays the tax, but you don’t necessarily know who ultimately ends up paying. Right? Because that company could pass along the full burden of that tax onto consumers or onto other businesses that it’s selling to, the foreign company that makes the good could lower its price or could hold its price constant.” Bonham said.

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While on the campaign trail, President-Elect Trump has proposed large tariffs of 20% on all foreign goods and 60% on goods from China.

“I will be surprised if we see a 20% across the board, tariff,” Bonham said. “So that would be an enormous increase in tariffs. I’m pretty sure that free so at the end of the last Trump administration, I think the US economy ended up with an effective tariff rate on all goods of less than 3%. And so going from 3% to 20% would be enormous, and would raise costs for, pretty much every household in the country. Estimates range from $1,000 a household to $2,000 a household depending on what the the tariffs are, and those tend to be highly regressive. It tends to fall on the lowest-income households. So as I said, I don’t expect we’ll actually see a 20% tariff. It also has a negative impact on the overall economy. It tends to create some inflation. It would tend to slow economic activity. And so, if we end up with a 10% tariff across the board, then we’re talking about a modest increase in inflation and a modest slowdown in economic activity just from the tariff impacts.”

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Mass deportations of migrant workers are another policy initiative for the incoming Trump administration, which could impact the American economy.

“It tightens the labor market. It raises wages and also tends to keep interest rates higher for longer. So the combination of higher inflation, higher interest rates is a net negative for most households in Hawaii, even those who benefit who might benefit, say, from a reduction in their taxes on tips or something of that nature,” Bonham added.

A new tax policy could be passed if the Republicans do win the House after already capturing the Senate.

“The devil is in the details,” Bonham said. “When do these things happen, and how extensive are they? Right? So the the one thing that seems very clear is the Republicans look very likely to control the House is that the Republicans will have control of both the House and the Senate. So the Trump tax cuts that were set to expire at the end of 2025 are there’s there’s almost zero chance that those won’t get extended. Then the question is, how much do you get in additional tax cuts? Are we going to see tax cuts, on tip earners? Are we gonna see, taxes on Social Security waived? And all those things are very, very fluid because they all raise deficits and debt, and house Republicans that are fiscal conservatives are likely to not go along with all of those tax cuts. Any way you cut it no pun intended. Any way you look at this, cutting those taxes and some increase in government spending that raises deficits will expand the economy in the very near term. It will also create upward pressure on inflation and will also tend to, leave the Federal Reserve to slow down its interest rate cuts.”

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