Finance
Financial Experts’ 2025 Predictions for Inflation Under Trump
Every President has a major impact on inflation. Policies around government spending, taxation, and trade relations influence the prices of goods and services. President-elect Donald Trump will return to the White House in January, and it’s good to know how his next term can impact prices.
Read More: The Trump Economy Begins: 4 Money Moves Retirees Should Make Before Inauguration Day
Find Out: 5 Unusual Ways To Make Extra Money That Actually Work
Here’s what financial experts have to say about what to expect under Trump’s administration.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Although Trump’s second term hasn’t started yet, the president-elect has hinted at several changes he intends to make. Arron Bennett, founder and CEO at Bennett Financials, outlines the key policies that consumers should keep in mind.
“Key Trump policies that could influence inflation include his tax policies and trade strategies. By keeping or expanding the TCJA [Tax Cuts and Jobs Act], Trump could continue to support both businesses and middle-class families by ensuring they retain more of their income, reducing inflationary pressure. If more people have discretionary spending power, the broader economy could stabilize, potentially hedging against inflation.”
Bennett also suggests keeping an eye on tariffs.
“However, tariffs play a dual role. While they may incentivize bringing jobs back to the U.S. and support American manufacturing, they could also raise costs for goods, increasing inflation. The potential increase in domestic production costs due to tariffs might translate into higher consumer prices, particularly if China’s prices rise in response to U.S. tariffs.”
For You: Here’s How Much the Definition of Middle Class Has Changed in the South
The upcoming Department of Government Efficiency aims to remove unnecessary parts of the government, similar to how Elon Musk laid off more than 80% of Twitter employees when he took over. Bennett views the new program as a hedge against inflation.
“The Department of Government Efficiency could also play a role by cutting bureaucratic red tape, potentially reducing government spending and improving overall fiscal health, which could help counter inflationary pressures. Trump’s approach seems to hedge his bets–while policies like tariffs could increase costs, tax cuts and government efficiency measures could help balance these effects.”
Bennett mentioned that tariffs can lead to higher inflation, but Trump has some hedges in place to minimize inflation’s growth rate. Financial experts, like Ben Johnston, agree that Trump’s policies will increase inflation in the short run.
Johnston mentioned how higher tariffs can elevate the costs of goods and services, especially products made in China.
“President-elect Trump has proposed a significant increase in tariffs on the import of foreign goods including a 10% blanket tariff on all imports and a 60% tariff on Chinese goods. Higher tariffs will certainly cause prices to rise for U.S. consumers, as tariffs drive up the cost of the product being imported and these costs must be passed on to the customer,” said Johnston, COO of small business financial services Kapitus.
He believes that tariffs have some benefits in the long run, but it will be a bumpy road to reach those advantages.
“In the long run, higher tariffs may help protect the viability of certain U.S. manufacturers and could incentivize greater investment in U.S. manufacturing.”
Tariffs aren’t exactly new, especially in the context of protecting American companies. The Biden Administration increased the tariff rate on Chinese EVs from 25% to 100% earlier this year. Tariffs on a wider scale should boost inflation, but when done correctly, they can have long-term benefits.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Financial Experts’ 2025 Predictions for Inflation Under Trump