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The 2024 election will be here before you know it, and economists are watching it closely.If Donald Trump wins a second term, some experts believe it could affect the trajectory of inflation in the United States — that a second Trump term would mean higher tariffs, higher deficits and other policies that would increase inflation. While forecasting economic conditions isn’t an exact science, experts are able to speculate using knowledge about the past and some clues about the future.Learn More: Toilet Paper to Discontinued Items: 7 Ways Shrinkflation Has Come to CostcoFind Out: How To Get $340 Per Year in Cash Back on Gas and Other Things You Already BuyA new report from Allianz Research provides insights into how inflation could unfold under a Trump 2.0 presidency. The report shows that while some policies could increase inflation in the short-term, the overall inflation path would be shaped by factors like the Federal Reserve’s actions and broader economic conditions.GOBankingRates spoke to Maxime Darmet, senior U.S. economist at Allianz Trade, who co-authored a recent report by Allianz Trade research, titled “Trumponomics: the Sequel,” upon this very subject.A Tough Inflation Battle AheadThe next president is going to have their work cut out for them when it comes to dealing with inflation. The U.S. economy has been pretty sturdy lately, despite interest rates climbing.“While the U.S. has remained remarkably resilient despite rising interest rates and global uncertainty, it has become more prone to inflation volatility, given a larger exposure to frequent supply shocks and structural labor shortages,” said Darmet. “Against this backdrop, demand-boosting policies — such as tax cuts — or supply-hurting policies — such as tariff hikes — could re-ignite inflation faster and push up interest rates.”Whoever takes the Oval Office in 2025 will have to tread carefully with their economic plans. Big tax cuts might sound great at first — they put more cash in your wallet. But if there are limited goods to spend that money on, it can easily overheat the economy and make inflation spiral even higher.Read Next: Here’s How Much the Definition of Rich Has Changed in Every StateA Potential Trade WarIf Trump does end up back in the White House, it seems likely that he would double down on protectionist policies to boost U.S. manufacturing. He has proposed tariff increases, including 10% on all imports and 60% on Chinese goods.The Allianz report discusses two potential scenarios — one in which the U.S. tariff rate rises from 2.5% up to 4.3%. However, another scenario, in which Trump implements all the tariffs he has threatened, could push the rate to around 12%.Story continues“However, in both cases, …
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