Trump won an astonishing victory. But now we have to deal with what’s coming, and it’s going to be difficult. A $35 trillion dollar debt, and ongoing trillions in annual deficits, have made the reality of a severe economic downturn unavoidable.
Here are three things to know.
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If Kamala Harris had won, it would be worse. Harris would have used even more debt and deficits to cushion the twin calamities of high inflation and a slowing economy. A Harris Administration might have delayed the coming pain for a few months, but her policies would have made the inevitable suffering worse — deeper, harsher, and much longer lasting.
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The economists who predict Trump’s tax cuts and tariffs will result in higher debt, inflation, and interest rates than what would have resulted under Harris are ignoring some important factors.
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Still, the coming pain will be bad enough under Trump; and our best chance to limit the suffering and emerge stronger is to prepare locally.
Here’s what we can expect.
It’s true that Trump’s economic agenda rests on both tax cuts and higher tariffs. The consensus among economies is that such policies will put upward pressure on inflation and cause deficits to grow.
But economic predictions that fail to account for other important considerations are driven more by ideology than economic reality.
First, the fed will cut interest rates later this week by at least 25 basis points, and will likely cut again next month — some say by as much as 50 basis points. This will both keep recession fears in check and do more than tariffs to drive inflation.
When it comes to tariffs, Trump can act without Congressional approval. Still, it’s likely administrative procedures and negotiations will delay implementation for 6 months to a year. In his first term, it took 11 months before tariffs on China were implemented. This time, Trump wants significant increases to both the scope and magnitude of tariffs.
During the campaign, Trump proposed 60% tariffs on China, and 10% on everyone else — a 100 year high. The economic consensus suggests Trump’s tariffs would increase U.S. consumer prices by nearly a full percentage point.
But they don’t account for the likely rise in the value of the dollar which would work to offset import prices. And they don’t acknowledge the degree to which domestic suppliers will increase output and foreign companies will end-run levies with new manufacturing in the U.S.Most significantly, the economists don’t fully acknowledge that for Trump, threats of tariffs are often negotiating tools to reduce the trade barriers raised by other countries.
Musk hopes to cast out tens of thousands of government workers, close ineffective departments and agencies, and sell or repurpose government buildings.
He wants to slash government programs, cut procurements, and terminate hundreds, maybe thousands, of government contractors.
Fair enough. The problem is that Congress gets a vote and there is little evidence the politicians in the House and the Senate have the stomach for the temporary but significant pain spending cuts will cause.
Slashing the budget by a third will result in slower growth and higher unemployment, supply shortages, and radical market sell-offs. That pain will translate into a 2026 election certain to strike fear into even the most courageous Congressional cost-cutter.
Nevertheless, an approach that slashes spending now, coupled with reforms that change the way Congress budgets, would produce a far stronger and more prosperous economy over the long run.
Some in Congress would rather cover over our fiscal profligacy with higher spending, new taxes on job creators, and expanded entitlements. The Fed could also inject more liquidity with a regimen of quantitative easing. Ideas like those might well buy us another 6 to 12 months of relative comfort, but the long-term consequences would be far more severe than the steep and painful cuts proposed by Trump and Musk.
Either way, America is in trouble and we’re running out of time.
Local leaders should begin organizing now to prepare for what’s coming. Businesses, faith leaders, and charitable organizations each have a special role to play.
The reforms required to put our economy back on a sound footing will cause discomfort, but the sacrifices we make to secure a better, more prosperous future for ourselves and our families will be worth it.
If you’re wondering what role you can play, visit the In Trust Network and download the action steps you’ll find there.
There are only two choices. We can suffer alone. Or we can start now building the grassroots movement required to create mutual channels of support when the need hits. Only together can we not only survive the coming economic storm, but emerge stronger and more resilient.