A significant number of economists view the economic policy of President-elect Donald Trump, defined as 'America First' and dubbed 'Maganomics,' as likely to harm the economic growth of major countries. In particular, more than 8 out of 10 economists in the Eurozone and the United Kingdom believe that negative economic impacts are inevitable.
On the 1st (local time), according to the Financial Times (FT) and the University of Chicago Booth School of Business, a survey was conducted among more than 220 economists from the United States, the United Kingdom, and Europe regarding the impact of Trump’s return to the White House on their respective economies, confirming these findings.
In the United States, where a total of 47 economists participated, 11% responded that Trump’s economic pledges would have "significant negative effects," and 50% said there would be "some negative effects." Only about one in five expected positive impacts.
Sevnem Kalemli-Ozcan, a professor at Brown University and a member of the New York Federal Reserve Bank’s Board of Economic Advisers, stated, "Trump’s policies may bring some short-term growth, but they will come at the cost of a global economic downturn," adding, "Eventually, it will boomerang back to the U.S. and cause damage." Currently, most economists expect the U.S. economic growth rate this year to far exceed that of Europe. Professor Ozcan warned, "His policies will cause inflation not only in the U.S. but worldwide," and cautioned, "We are heading toward a stagflationary world."
President-elect Trump, who is set to be inaugurated on the 20th, has announced plans for a universal tariff of up to 20% on all imports, large-scale deportation of illegal immigrants, and tax cuts. All of these are considered factors that could fuel inflation. If inflation rebounds, it could inevitably hinder further interest rate cuts by the Federal Reserve (Fed). Janice Avery, a professor at Northwestern University who served in the Obama administration, pointed out, "The announced pledges include substantial tariffs and deportation of immigrant workers," adding, "Both tend to cause inflation and are likely to have negative effects on growth."
Economists in the Eurozone expressed even more pessimistic concerns. The combined responses indicating that Maganomics would have a large (13.2%) or some (72.1%) negative impact on the Eurozone exceeded 85%. Positive impact responses were in the single digits.
In particular, concerns about manufacturing output in the Eurozone were significant. Martin Wolburg, chief economist at Generali Investments, predicted that Trump is likely to target Germany’s automobile industry. Christophe Boucher, Chief Investment Officer (CIO) at ABN AMRO Investment Solutions, foresaw that Trump’s tariff warnings against China "could pose an even greater challenge to Europe," diagnosing that Chinese brands might launch a price offensive in the European market as a result.
The United Kingdom is also expected to be unable to escape secondary repercussions. More than 60% of the 100 economists surveyed responded that Maganomics would have negative effects. Those expecting positive effects were just slightly above 10%. Barrett Kupelian, senior economist at PwC UK, pointed out, "The Trump administration will become an 'unpredictable machine,' making it difficult for businesses and households to make long-term decisions," explaining that this will inevitably lead to economic costs. Ultimately, uncertainty is expected to worsen economic sentiment.
The bleak outlook of economic experts contrasts with the optimistic expectations of stock market investors ahead of Trump’s second term. Although expectations for further Fed rate cuts have diminished, causing some retreat, the New York stock market surged after Trump’s victory in the November election last year. The S&P 500 index, centered on large-cap stocks, rose 23.3% in 2024 following a similar increase in 2023, maintaining a rise in the 20% range. Benjamin Bowler, strategist at Bank of America (BoA), predicted that the stock market rally is likely to continue through 2025, driven by Trump’s laissez-faire economic policies, tax cuts, deregulation, and the AI revolution.
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