Unlock the White House Watch newsletter for free
Your guide to what the 2024 US election means for Washington and the world
Donald Trump’s vision to reshape the world’s largest economy through protectionist policies that put “America first” will hurt growth, according to a Financial Times poll of economists that contradicts investor sentiment for the US president-elect’s plans.
Surveys of more than 220 economists in the US, UK and Eurozone on economic performance TrumpHis return to the White House showed most respondents believe his protectionist shift will overshadow the benefits of other elements of what the president-elect has dubbed “Maganomics.”
Many economists in the US, polled jointly by the FT and the University of Chicago’s Booth School of Business, also believe Trump’s new term will encourage inflation and lead to greater caution on the part of the Federal Reserve in lowering interest rates.
“Trump’s policies may bring some growth in the short term, but it will be at the expense of a global slowdown that will then return and later hurt the US,” said Şebnem Kalemli-Özcan, a professor at Brown University who also sits on the New York Fed’s Economic Advisory Panel . “His policies are also inflationary, both in the US and in the rest of the world, so we will move into a stagflationary world.”
However, most economists – including the IMF, the OECD and the European Commission – predict stronger growth in the US than in Europe in 2025.
The US economy has consistently outgrown its counterparts across the Atlantic since the coronavirus pandemic, expanding at an annual rate of 2.8 percent in the third quarter of last year.
Trump has yet to lay out a comprehensive economic policy prospectus, leaving analysts to base their views on promises and threats made during the campaign.
These include plans to impose blanket tariffs of up to 20 percent on all US imports, mass deportations of undocumented workers, red tape cuts and permanent tax cuts introduced in 2017.
Trump, a self-described “customs man,” has a long-standing and deep-seated belief that the U.S. needs to close its trade deficit and boost domestic manufacturing.
“The announced policies include significant tariffs and deportations of immigrant workers,” said Janice Eberly, a former Obama administration official who is now a senior U.S. Treasury official at Northwestern University. “Both tend to be inflationary and probably negative for growth.”
Overall, more than half of the 47 economists surveyed who specialize in the US economy expect “some negative effect” from the Trump agenda, with another tenth predicting a “large negative effect.” On the other hand, a fifth of those surveyed expect a positive effect.
The gloom among economists contrasts with investor optimism about Trump’s second term.
US S&P stock index grew up in the weeks after Trump’s victory, though he pared some of those gains in December after U.S. rate-setters signaled they would cut rates this year less than previously expected.
In his the best biennial this centurythe benchmark index ended 2024 with a growth of 23.3 percent, after a similar increase in 2023.
Benjamin Bowler, a Bank of America strategist, said this week that Trump’s “laissez-faire economy, tax cuts and deregulation,” along with a potential “AI revolution,” means growth is likely to continue into 2025.
A separate FT poll found euro zone economists were even more pessimistic about the impact of Trump’s policies on their region than those in the US, with 13 percent of analysts saying they expected a big negative impact and another 72 percent forecasting some negative repercussions.
For the eurozone, the main concern is manufacturing production, especially in Germanythe largest economy in the region.
Martin Wolburg, senior economist at Generali Investments, highlighted the possibility that the country’s auto industry will be “particularly targeted” by Trump.
Trump’s threat of 60 percent tariffs on China “could further challenge European industries,” said Christophe Boucher, chief investment officer at ABN Amro Investment Solutions, as it would increase the prospect of Beijing flooding the region with cheap products.
While the UK is seen as better insulated from tariffs, thanks to its large services sector, Alpesh Paleja, chief economist at the CBI, warned that the country would be exposed to a “second-round effect” if tariffs hurt eurozone growth.
In the UK, more than 56 percent of nearly 100 respondents expect some negative effect, with many citing an impact on sentiment due to the prevailing climate of uncertainty ahead of Trump’s January 20 inauguration. Slightly more than 10 percent predict some positive effect.
“The Trump administration will be an ‘unpredictability machine’ that will distract businesses and households from making long-term decisions with ease,” said Barret Kupelian, chief economist at PwC UK. “This will inevitably have an economic cost.”
