Former President Donald Trump’s 2025 inaugural address outlined an “America First” economic agenda centered around four key pillars: combating inflation, promoting oil drilling over green energy, imposing tariffs on foreign trade, and deporting unauthorized immigrants. This analysis delves into each of these proposals and their potential economic implications.
Table Content:
Tariffs on Foreign Trade: An “External Revenue Service”
Trump proposed the establishment of an “External Revenue Service” to collect tariffs on imported goods, mirroring the function of the IRS for domestic taxes. This new agency would handle the duties currently managed by U.S. Customs and Border Protection. The aim was to generate significant revenue for the treasury from foreign sources, particularly through high tariffs on countries like Mexico, Canada, and China.
However, economists generally agree that the cost of tariffs is ultimately borne by consumers. Merchants often pass on the increased cost of imported goods due to tariffs, leading to higher prices for American consumers. This could potentially fuel inflation, counteracting Trump’s stated goal of reducing it. Furthermore, creating a new federal agency requires Congressional approval, potentially facing significant political hurdles.
Combating Inflation: A Cabinet-Level Directive
Inflation was a key factor in the 2024 election, and Trump pledged to address it directly. He directed his cabinet to leverage their authority to combat record inflation and lower costs for Americans. While inflation had peaked in June 2022 at a four-decade high of 9.1%, it had decreased to 2.9% by December 2024, still above the Federal Reserve’s 2% target. Trump’s approach to curbing inflation remained largely undefined in his address, lacking specific policy proposals beyond the directive to his cabinet.
:max_bytes(150000):strip_icc()/GettyImages-167114388-cf200e573d264f6181a1e5b176c34a8a.jpg)
Promoting Oil Drilling: A National Energy Emergency
Trump declared a “National Energy Emergency” and vowed to prioritize domestic oil production. He planned to issue executive orders promoting drilling and reversing Biden-era policies supporting green energy and electric vehicles. Reducing energy costs was presented as a crucial element in fighting inflation, as gasoline, natural gas, and electricity prices significantly impact household budgets and contribute to inflation metrics like the CPI. This approach signaled a sharp departure from previous efforts to transition towards renewable energy sources.
:max_bytes(150000):strip_icc()/GettyImages-1140387820-d020644755a34e62b024a1245c8126b0.jpg)
Deporting Immigrants: A National Security Priority
Immigration was a central theme in Trump’s campaign, and he reiterated his commitment to stricter immigration enforcement. He pledged to declare a national emergency at the southern border, deploy the military to prevent illegal immigration, and deport unauthorized immigrants already in the country. The economic impact of these policies, particularly on industries reliant on immigrant labor like construction, could be substantial. Unauthorized immigrants constitute a significant portion of the workforce in certain sectors, and their removal could lead to labor shortages and increased costs.
Conclusion: A Return to “America First”
Trump’s inaugural address signaled a return to his “America First” economic policies. His proposals focused on traditional energy sources, protectionist trade measures, and stricter immigration enforcement. While aiming to combat inflation and boost American industry, these policies could have unintended consequences, potentially exacerbating inflation, triggering trade wars, and disrupting labor markets. The long-term economic impact of these proposals remains to be seen.
