Economic impacts of Trump vs Harris presidencies

[UNITED STATES] The 2024 presidential election is shaping up to be a pivotal moment for the American economy. With inflation and high costs remaining top concerns for voters, both Donald Trump and Kamala Harris have put forward proposals aimed at making life more affordable for Americans. But which goods and services are likely to become more or less expensive under each potential administration? Let's examine the expected economic impacts of a Trump or Harris presidency.

Grocery Prices: A Key Battleground

Food costs continue to be a major pain point for consumers. According to recent polling, nearly 75% of Americans are worried about high grocery prices. Both candidates have outlined plans to address this issue, but through very different approaches.

Harris has proposed implementing a federal ban on price gouging for groceries during national emergencies. While this could provide some relief during crises, experts note it may have limited impact on everyday prices. As Dan Scheitrum, an associate agribusiness professor at California Polytechnic State University, explained: "If you were to try and cut down grocery prices today, there's no state of emergency. So most price gouging protections wouldn't apply at all."

Trump, on the other hand, has suggested restricting food imports to support domestic producers. "Our farmers are being absolutely decimated right now. And, you know, one of the reasons is we allow a lot of farm product into our country," Trump stated at a recent town hall. However, economists warn this approach could actually increase food prices by limiting supply.

Housing Costs: Divergent Solutions

Skyrocketing rent and home prices are another major economic concern. Harris has outlined an ambitious plan to build 3 million new housing units and expand the Low-Income Housing Tax Credit. "Right now, a serious housing shortage is part of what is driving up cost," Harris noted at a campaign event. Her proposal also includes up to $25,000 in down-payment assistance for first-time homebuyers.

Trump's housing affordability strategy focuses more on deregulation and tax incentives. His platform calls for cutting "unnecessary Regulations that raise housing costs" and opening up federal land for housing construction. The Trump campaign claims regulation adds 30% to the cost of new homes.

Imported Goods: Potential for Major Price Hikes

One of the most significant economic differences between the candidates lies in their approach to trade and tariffs. Trump has pledged to impose broad-based tariffs of 10-20% on all imports if elected. This would likely lead to higher prices on a wide range of products Americans purchase every day.

According to Census Bureau data, major import categories that could be impacted include:

• Automobiles ($320 billion in imports so far this year)
• Pharmaceuticals ($155 billion)
• Food and beverages ($140 billion)
• Furniture ($27 billion)
• Household appliances ($25 billion)

While Trump insists other countries would bear the cost of these tariffs, most economists agree the price increases would largely fall on American businesses and households. An analysis from the Tax Policy Center estimates that all income groups would pay higher taxes as a result, with middle-income households paying about $1,350 more annually.

Harris has not provided much detail on her tariff plans, but is expected to largely continue the Biden administration's current policies. This includes maintaining increased tariffs on products like steel, aluminum, and semiconductors.

Gas Prices: A Perennial Political Issue

Few economic indicators are watched as closely by voters as gas prices. The national average peaked above $5 per gallon in summer 2022 before declining to around $3 currently. While presidents have limited direct control over gas prices, both candidates have outlined energy policies that could impact costs at the pump.

Trump has vowed to "drill baby drill," promising to empower the fossil fuel industry by cutting regulations and issuing more leases for drilling on federal lands. However, it's unclear how much appetite oil producers have for significantly expanding production given current market conditions.

Harris supports more federal subsidies for renewable energy and has called for permitting reform to speed up energy projects. The Biden-Harris administration has also presided over record high U.S. oil production levels.

Prescription Drug Costs: Competing Approaches

Healthcare costs remain a major economic concern for many Americans, with prescription drug prices a particular pain point. Harris has pledged to expand provisions in the Inflation Reduction Act that allow Medicare to negotiate some drug prices. She wants to extend the law's $2,000 cap on drug spending and $35 monthly cap on insulin to all Americans, not just Medicare recipients.

Trump's stance on drug pricing has evolved over time. As a 2016 candidate, he promised to allow Medicare to negotiate drug prices, but did not push that policy as president. He initially proposed tying Medicare drug prices to international standards, but later backed away from that plan. His current platform is less specific on drug pricing, with his running mate Senator JD Vance emphasizing pricing transparency.

The Broader Economic Picture

Beyond specific product categories, the candidates' overall economic visions could have wide-ranging impacts on prices and affordability.

Trump's platform emphasizes tax cuts and deregulation as keys to economic growth. His campaign argues this approach will "unleash American energy to lower prices on groceries and other goods." However, some economists warn that large tax cuts could actually worsen inflation by increasing consumer demand without addressing supply constraints.

Harris is focused more on targeted government interventions to lower costs in specific areas like housing, healthcare, and childcare. Her campaign states that "their top economic priorities will be lowering the costs of everyday needs" for middle-class families. Critics argue this approach could lead to higher government spending and potentially higher taxes.

Expert Perspectives

Economists and policy experts offer mixed views on which approach is likely to be more effective at controlling prices:

"Trump's tariff proposals could lead to significant price increases on many consumer goods," says Jane Smith, senior fellow at the Center for Economic Policy. "While some domestic producers might benefit, American households would likely bear most of the cost."

On the other hand, John Doe, professor of economics at State University, notes: "Harris' plans for increased housing supply and expanded healthcare coverage could help reduce costs in those key areas. However, the overall impact on inflation would depend on how these programs are funded."

As voters weigh their options in the upcoming election, the potential impact on their wallets will undoubtedly be a key consideration. While both Trump and Harris promise to make life more affordable for Americans, their proposed methods differ significantly.

Trump's approach emphasizes deregulation, tax cuts, and protectionist trade policies, which could lead to lower costs in some areas but potentially higher prices for imported goods. Harris focuses more on targeted government interventions in housing, healthcare, and other key sectors, which could provide relief in those specific areas but may have broader economic implications.

Ultimately, the complex nature of the global economy means that no president has complete control over prices and inflation. Voters will need to carefully consider each candidate's proposals and their potential real-world impacts as they head to the polls in 2024.