"Tariffs and Immigration Policies to Be Impacted if Trump Wins"
"Surge in Immigration Contributes to US Job Growth"
Goldman Sachs projected that if former President Donald Trump wins the U.S. presidential election this November, the U.S. Gross Domestic Product (GDP) could be negatively impacted. Conversely, if Vice President Kamala Harris wins, GDP is expected to increase slightly.
According to Bloomberg News on the 3rd (local time), economist Alec Phillips of Goldman Sachs released a report containing these findings.
The Phillips economist team estimated that if former President Trump wins the election by a landslide or wins while the opposition controls Congress, the economic growth damage caused by tariffs and strict immigration policies would outweigh the positive effects of maintaining Trump's tax cut policies. This assumption is based on increased tariffs on China, higher tariffs on cars imported from Mexico and the European Union (EU), and reduced immigration leading to slower labor force growth. Accordingly, under the Trump victory scenario, GDP is expected to peak with 0.5% growth in the second half of next year and the growth effect would disappear by 2026.
On the other hand, if Vice President Harris is elected and the Democratic Party controls both houses of Congress, new spending and middle-class income tax credit policies are expected to slightly offset the investment decline caused by corporate tax increases. Under the Harris victory scenario, GDP growth rates in 2025-2026 are projected to rise very slightly. However, if Vice President Harris does not control both the House and Senate, the report added that "the impact of policy changes would be minimal and neutral."
Goldman Sachs focused on immigration policy. They projected that the Harris administration would allow 1.5 million new immigrants annually, while the Trump administration would allow 1.25 million. If the Republican Party controls Congress under the Trump administration, the number could decrease to as low as 750,000 per year.
Many economists believe that despite high interest rates in recent years, the surge in immigration has contributed to employment growth in the U.S. Goldman Sachs economists expect that under the Harris victory scenario, immigration would contribute 10,000 to 30,000 more people per month to labor force growth compared to the Trump victory scenario.
From a trade policy perspective, it is expected that if Vice President Harris wins, there will be no additional tariff increases. Under the Trump administration, tariff increases on China, the EU, and Mexico are likely to cause inflation. However, the report explained that the impact of Trump's 10% universal tariff policy would be even greater but would take time to materialize.
The Trump campaign responded by saying that even in 2016, economic recovery was not anticipated and stated, "If new forecasts are to be considered reliable, Wall Street elites need to review the record and acknowledge the shortcomings of past work." The Harris campaign said, "Experts from the right, left, and center all agree that former President Trump would bring economic disasters such as a sharp rise in unemployment, an inflation bomb, soaring debt, and a potential recession."
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