A series of appearances in recent weeks have solidified a truism about former President Donald Trump. Almost every economic challenge, from budget deficits to weak social safety nets, seems solvable with more oil drilling and new tariffs.
It’s “very easy,” he likes to say — and will also bring in waves of money.
But economists and other experts are skeptical on a number of fronts. “Is it really that easy?” Will it bring in as much money as the former president thinks?
Not to mention whether such policies are likely to cause more problems than they solve.
Still, President Trump’s momentum is undiminished, with a series of events in recent weeks, from recent debates to economic speeches to multiple rallies and press appearances, suggesting that the twins are helping him win in November. America’s coffers promise to overflow. policy.
“We’re going to have a tremendous amount of money coming into us,” he said in a speech in New York last week on tariffs. He added on Thursday while in Arizona that oil is yet another “liquid gold.”
Former Republican presidential candidate Donald Trump campaigns in Tucson, Arizona on September 12 (Justin Sullivan/Getty Images) · Justin Sullivan via Getty Images
Trump, in turn, promised that these funds would pay for nearly all of his other ideas. He said everything from cutting the deficit to combating inflation to cutting taxes and halving prices would leave enough money to create a new national sovereign wealth fund.
In a widely watched exchange at the New York Economic Club, President Trump was asked what kind of child care policy he supported, but he returned to the question of tariff revenue.
“These numbers are much higher than the numbers we’re talking about for things like child care,” Trump said in a meandering and widely criticized response.
President Trump’s rhetoric dispels questions about the costs of his other initiatives, from extending the 2017 tax cut to calling for free IVF coverage and eliminating the overtime tax announced this week. It is also a means of trying.
President Trump also recently endorsed a government efficiency commission chaired by Tesla CEO Elon Musk, which he says could generate trillions more in revenue.
Oil drilling is perhaps the area that Republican candidates return to most often, promising to unleash the field during a near-all campaign shutdown.
What he tends to overlook is that the United States under the Biden/Harris administration is drilling more oil now than during President Trump’s term. In fact, the United States currently produces more goods than any other country in history.
But President Trump still promises that his plan for the sector will not only bring in billions of additional dollars, but also cut energy prices in half.
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“We’re going to cut that in half, and that includes heating, air conditioning, electricity and gas for your car,” he promised his audience in Wisconsin. “And we’ll do it briefly, you just wait for me until then.”
Many experts dismiss this idea, pointing to various factors that make such a dramatic price drop less likely.
Regardless of who the next president becomes, gas prices are currently at their lowest levels since 2021 and could benefit from the recent trend of overall gas deflation.
However, there are limits.
If Trump wins, he will likely quickly eliminate red tape for oil companies and open up new drilling areas. However, the oil companies themselves may not be receptive to this and may become skeptical of the plan, which could lead to a significant drop in profit margins.
“Even if you open up some federal lands and reduce frictional costs associated with permitting, the economics will drive that decision,” said Rebecca Babin, senior U.S. energy trader at CIBC Private Wealth. told Yahoo Finance that a major expansion is unlikely, but added that there could be some changes in margins.
He said it was also unlikely that the increased supply would cut energy costs in half. It’s only likely to happen because of some severe demand shock.
“When energy prices are cut in half, something has gone horribly wrong,” she added.
And beyond oil drilling, President Trump is likely to turn to tariffs as a way to finance his plans.
The former president has promised to impose tariffs of 10% to 20% on U.S. trading partners and 60% on China if he returns to the Oval Office.
President Trump recently said, “If we just use our heads and be smart and don’t let other countries take advantage of us, we’ll get our national economy back on track.”
But experts are skeptical even on this front, often pointing out that such aggressive tariffs could push up prices and slow the economy.
A recent Goldman Sachs memo highlighted these concerns, saying that a Kamala Harris victory would be bad for economic growth, at least when it comes to gross domestic product, as President Trump could inflict a “tariff-based growth hit.” This proved to be the best result. If he wins, I’ll bring it.
And that’s despite Goldman analysts predicting that Trump is unlikely to implement all of his tariff policies even if he wins.
Donald Trump speaks at the New York Economic Club on September 5th (Spencer Pratt/Getty Images) · Spencer Pratt via Getty Images
Some researchers have analyzed the impact on prices, and the Peterson Institute for International Economics has found that President Trump’s idea of imposing 60% tariffs on China and 10% tariffs on other trading partners is a typical middle-class It said households would have to pay at least $1,700 more each year.
Another view, from Brendan Duke of the left-leaning Center for American Progress, is that if tariffs of 60% against China and 20% against other trading partners went into effect, average households would end up paying an even higher $3,900 a year. This is expected to be the case, and this statistic is a statistic. Kamala Harris’ favorite.
“After 75 years, other countries will finally pay us back for everything we’ve done for the world,” President Trump argued in a debate this week, adding that the tariffs are actually on U.S. ports of entry. It ignored the fact that it was being paid by the company. Economists argue that the additional costs are usually passed on to consumers.
Some are also skeptical of Trump’s belief that tariffs will bring in enough money to pay for other programs. President Trump significantly increased tariffs during his first term in office, but President Biden has largely left them unchanged.
But in 2022, the most recent year available, tariff revenues amounted to $111.8 billion, despite a deficit of nearly $2 trillion.
But either way, Trump’s momentum has hardly slowed. Mr. Trump recently promised that his ideas could bring the United States to “zero deficits in a fairly short period of time.”
Although few expect President Trump to change course in the roughly 50 days between now and Election Day, his reliance on these two proposals is starting to receive at least some political backlash.
His recent exchanges about child care caused a stir, especially when he abruptly pivoted to tariffs and appeared to be trying to minimize the high costs that parents pay.
“There’s a lot of talk about how expensive childcare is, but relatively speaking, it’s not that expensive compared to what the numbers are going to be,” he said. Girls Who Code founder Reshma Saujani, who asked Mr. Trump, immediately criticized Mr. Trump’s response to her question as frivolous at best.
The next day, she said on CNN, “He said childcare costs are no big deal,” adding, “That’s an insult to parents.”
Ben Werschkul is Yahoo Finance’s Washington correspondent.
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