By Joseph Aubert – Economics & Business Editor 

Because of its enormous gross domestic product and dominant position in international trade, The United States of America has remained at the top of the economic food chain for decades. Many people around the globe are still unsure of how a Republican may affect the domestic and global economies as Donald Trump secured the 2024 U.S. presidential election. Trump’s campaign has focused on strengthening the U.S. economy through tax cuts, energy independence, deregulation, and tougher trade policies, especially with China. Here are some potential economic implications of the recent elections, both domestically and internationally. 

Tax cuts and deficit concerns 

Much like when he took the reins of the U.S. in 2017, Trump’s economic plan includes tax reductions for corporations as well as individuals. Lower taxes help stimulate growth by encouraging people to spend and corporations to take on larger investments. However, with a national debt adding up to around $36 trillion, a lot of experts are concerned these tax cuts could deepen the deficit, creating new financial challenges. While cutting taxes brings short-term economic benefits like economic growth and increased spending, it contributes to reducing the government’s income, which can lead to higher government borrowing. Higher government borrowing then puts upward pressure on interest rates, increasing the price of borrowing for the average Joe. Higher U.S. rates would impact global markets and raise borrowing costs for businesses and consumers around the world. 

Energy Independence and Inflation 

During his speech at the 2024 Republican National Convention, Donald Trump promised that his government would “drill baby drill”, emphasizing his party’s intentions to increase domestic

oil and gas production to achieve energy independence. While this move would reduce the U.S. ‘s reliance on foreign oil and stabilize energy prices in the country, in turn reducing the price of consumer goods in a tense global geopolitical context, many fear the environmental impacts of such activities. The push for energy independence would likely create new tensions with some of the U.S.’s allies, including Canada, who may see Trump’s policies in environmental standards as a step backward. 

Trade policy and relations with China 

Trump’s administration focused on bringing an “America First” trade policy to the country, to reduce the country’s dependence on Chinese production. This approach includes increasing tariffs and trade barriers, similar to strategies used during Trump’s first term. Trump also plans to fill the void created in the government’s budget by lowering income taxes with these tariffs. However, these restrictions on trade will impact foreign multinational companies exporting goods and services to America, potentially raising prices on American imports and adding to inflationary pressures. It is a well-known economic principle that the cost of increased tariffs is usually transferred to the end consumer, rather than absorbed by the foreign firms. Reducing the U.S. reliance on Chinese imports aligns with global trends of diversifying supply chains, however, it could significantly disrupt the supply chains of businesses depending on Chinese goods. 

In a world facing different economic challenges, including inflation and geopolitical conflicts, Trump’s administration’s policies could have both positive and destabilizing effects on the global economy. For Canada and other U.S. allies, navigating these changes will require balancing cooperation with caution for potential disruptions across trade, climate, and security dynamics.