There is no doubt about what levels of economy Trump inherited from Joe Biden, the United States of America’s 46th President under the Democratic Party. Arguably, Trump inherits a strong economy. Fundamentally, the post-COVID-19 pandemic US economic recovery has been regarded to have outpaced that of other advanced economies in inflation, productivity, and growth measures.
Much more that is not to be in doubt is Trump’s also inherent troubling fiscal scheme that lies beneath this strong economy. By the side of over $36 trillion, many US economists argue is over six times its 2001 level
Conceivably is the fact that US national debt is unsustainable, the question is with the debt-to-GDP ratio poised to hit record heights under Trump’s second term.
There is fear over how President Trump is starting his second term, as there are issues with fiscal obstacles that defect or change the flight of the US economy and impact the global economy in general.
One such challenge is avoiding a government shutdown, preventing a default on US sovereign debt, and respectively connected to managing America’s ballooning national debt.
As observed by experts and analysts recently, President Trump’s failure to adequately deal with these issues could have enduring political and economic consequences.
In debate as always is that borrowing is not necessarily bad. Frankly, we see lots of expressed favour that support this gesture, pointing out that it enabled pressing government action, especially during downturns. A situation that allows borrowing and debt-financed spending on areas like infrastructure, research, and human capital can boost growth and ultimately pay for itself.
However, the current route raises serious concerns. For instance, the Trump government within a week of assuming office, signed over forty-two Presidential Executive Orders. At this, many think that the Trump administration’s policy changes could augment or relieve these pressures, although proposed solutions appear inadequate.
One such Presidential Executive Order is the ‘Department of Government Efficiency’ (DOGE).
However, analysts and fiscal experts doubt if it can help reduce national debt obligation, with the government targeting $2 trillion in savings.
Another is an Executive Order on the ‘External Revenue Service’ to collect tariffs from abroad. The aim of this order according to the Trump government, is to block leakages and shore up revenues. A measure to recover the lost tariff revenues falls under the Biden administration which is more than $4 trillion.
Analysts are already raising concerns that this could be American buyers in due course bearing the cost. With the US Inflation hovering between four percent and four percent. The worries expressed here are that this could fuel inflation and exaggerate inequality. There are indications of the tax cut from the Trump government, as did in the 2017 tax cut that favour Trump friends and business allies.
Unfortunately, one critical concern is Trump’s management of a rollover of $9 trillion of the debt year 2025, in the composition of Treasury bills, US mutual funds, and hedge funds tides to households.
Further, rising debt threatens to crowd out private investment, hampering growth, and stifling real growth of the US economy. Likewise, a heavy debt burden imposes opportunity costs, as interest payments take precedence over investments in the nation’s economic, security, and social foundations.
As argued by economists, this would drawback the US in strategic competition. First, it limits options for responding to future crises, such as the future pandemic or climate tragedy.
Secondly, the US fiscal trajectory under Trump’s administration may face difficulties, if the structured approach to contain is not charted. Lastly, is to understand that the stakes of managing the economic risks extend beyond partisan politics, as this has been demonstrated within the space of the foundations of American economic power and world policy.
Meanwhile, Trump may not be ready for the continued stimulus drive of the US macroeconomic environment, and his government must, however, be in a position to prevent the consequences. In the face of the US Federal Reserve easing, and stability that constrain future choices, with marks toward straightening the dollar strength.
Interestingly, how Trump would balance campaign promises with the reality of US economic prospects, looking at the mountain of fiscal challenges
Worries are also beyond the US border, going by some of the actions that would shape Trump’s administration’s first 100 days. Arguably, it will reverberate throughout his presidency and beyond, and the global economy will feel the impact.
For instance, some lines of issues from Trump were signed by Presidential Executives. The Withdrawing from the Paris Climate Agreement. Some analysts have now been tagged as not too good for the Americans. Another is that declaring a National Energy Emergency and easing Regulations on Oil and Gas Production is considered a threat to the global energy economy, especially crude oil prices. America, which is not a member of the Organization of Petroleum Producing Countries (OPEC), is going to pump more crude to flood the international oil market. In this case, Nigeria will suffer from crude price nose-diving significantly if it happens and the nation’s budget peg of $75 per barrel would drastically reduce targeted oil revenues of about N19 trillion.
Similarly, the fallout of Trump’s imposition of Tariffs on imports from China, Mexico, and Canada, is viewed now as another round of tax war, which if not managed properly may become a global trade tax tragedy.
In the final analysis, the Trump administration on the outside meant well for Americans, but could not love America more than those opposing him, has over twenty State Attorney Generals in the United States in court to challenge many of his passionate Presidential Executive Orders. While the global economy is intrinsically linked to the US, with the former shaping and reshaping the dynamics of the former. The pertinent question that is pumping up is how can the global economy survive the next four years, under Donald Trump’s Presidency and Economic launching. As we wait.
Adefolarin A. Olamilekan,
Political Economist, and Host of
The Market Report on ADBN Television,
08073814436
