A Trump Recession is coming, and it is going to be as painful as it was avoidable.
Donald Trump seems to be intent on creating a recession so deep it will rival the economic collapse of 2008. High tariffs, firing hundreds of thousands of federal employees, and carrying out the mass deportation of immigrants are the perfect recipe for higher inflation, increased unemployment, and decreased GDP. In short, a Trump Recession is coming and it will be an entirely self-inflicted economic disaster.
A tariff is a tax increase on the American people and leads to higher inflation. Tariffs make American importers pay a higher price for foreign goods and they pass along much of that increase to consumers. This means the blanket 10% tariff on the world, the outrageous 245% tariff on China, and all of the tariffs that were already in place before Trump decided to declare a trade war on the world are going to create significant inflation.
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The mass firing of government employees logically results in a higher unemployment rate. Over a quarter of a million government employees have already been fired, accepted buyouts, been forced into early retirement, or been informed they should expect to be terminated. There are also more on the way, and these mass firings are going to further increase the unemployment rate and slow economic growth because less people will have money to spend.
The mass deportation of immigrants lowers the productive capacity of the economy and reduces GDP. It also leads to lower tax revenues and jobs being left vacant because Americans will not do them. In October 2024, the American Immigration Council predicted dire economic consequences as a result of the mass deportation of undocumented immigrants and others who have their legal status revoked:
Beyond the direct financial cost of mass deportation, we also estimated the impact on the U.S. economy. Due to the loss of workers across U.S. industries, we found that mass deportation would reduce the U.S. gross domestic product (GDP) by 4.2 to 6.8 percent. It would also result in significant reduction in tax revenues for the U.S. government. In 2022 alone, undocumented immigrant households paid $46.8 billion in federal taxes and $29.3 billion in state and local taxes. Undocumented immigrants also contributed $22.6 billion to Social Security and $5.7 billion to Medicare.
In short, Trump is doing exactly what someone would do if they want to purposely create a recession. His policies lead only to higher inflation, a significant increase in unemployment, and a reduction in GDP. These three things combined are known as stagflation, and there is going to be widespread economic pain for Americans.