On the campaign trail, candidate Trump used different sized Tic Tac boxes — one normal sized, one much smaller — to illustrate how Americans are losing out to inflation.
Now President-Elect Donald Trump is determined to resolve the present “inflation nightmare” and lower prices “very quickly” as soon as he’s in office.
But will he?
In a survey of registered voters conducted by CBS News and YouGov, seven in 10 expressed confidence in his ability to follow through with that plan.
Experts, however, are not as confident. According to some economists, policies that comprise the so-called “Trumponomics” — which include tariffs, tax cuts and a crackdown on immigration — are likely to worsen inflation in the U.S.
Mark Zandi, chief economist of Moody’s Analytics, told CBS News that under a Republican election sweep, inflation may reach 3.6% by 2025 if Trump implements his economic agenda. Right now, inflation is moving toward the Federal Reserve’s goal of 2% per year, Moody’s noted, but the Trump’s efforts could slow or negate progress.
With that in mind, here is a look at how some of Trump’s key campaign promises could impact inflation, and what financial experts say would help protect your savings.
Tariffs can lead to higher prices
In the Republican Party platform for the 2024 election, Trump promised to slash corporate tax rates and cut individual income taxes. He plans to supplement the resulting lost revenue with tariffs.
Moody’s argues that tariffs are taxes on consumption, and will increase the cost of importing goods into the U.S. — which may cause businesses to pass those expenses on to consumers, reigniting inflation.
Economists warn against taking a wait-and-see approach. Many financial advisors recommend investing in gold as a hedge against inflation.
A crackdown on immigration may cause chaos
Another key Trumpian policy is to deport millions of undocumented immigrants. The Trump campaign’s argument is that doing so will help reduce U.S. government spending — at both state and federal levels — given these immigrants’ children are afforded free public education and they themselves contribute to increased government healthcare spending.
CBS News noted that immigrants fill much-needed positions and reverse labor force declines. Deporting 10 million undocumented immigrants — which is what the Trump campaign is calling for — would adversely impact the U.S. economy and cause different kinds of inflation in the same way the pandemic did when millions of people were forced to stop working.
In the pandemic’s aftermath, supply chains fell apart, demand skyrocketed, goods went scarce, and prices spiked. Reduced immigrant contributions to the workforce could have a similar effect.
That could be an early indicator that a jump in inflation in 2025 may render it a smart decision to invest in precious metals right now before making a purchase becomes cost prohibitive. Should it prove historically consistent, gold’s value during periods of inflationary pressures may also cool things off, at least when it comes to your own wallet.
What to do
One of the best ways to protect your savings is having money in different types of investments: ideally, ones that can go up when others are going down. For example, stocks tend to do poorly when inflation and interest rates are rising and there’s political turmoil brewing.
One investment that thrives in this scenario: gold
Keep in mind, though, that you shouldn’t abandon stocks entirely, and you shouldn’t put more than 10-15% of your long-term savings into gold.
Also keep in mind that not everyone in the gold business is on the up-and-up. Be careful who you deal with.
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