How Donald Trump’s Policies Contributed to Inflation and Rising Costs for the Middle Class and Poor

The recent surge in inflation and the rising cost of living have placed immense pressure on middle-class and low-income Americans. While inflation is a complex economic phenomenon with multiple contributing factors, it is essential to examine the role that Donald Trump’s policies played durin

g his presidency. From trade wars and tax cuts to deregulation and pandemic mismanagement, several of Trump’s decisions have had lasting negative impacts on the economy. This article will argue that these policies disproportionately hurt the middle class and the poor, exacerbating the current economic challenges facing millions of Americans.

1. The Trade War with China: Higher Costs for Consumers

One of Donald Trump’s signature economic policies was his trade war with China, which began in 2018. Trump imposed tariffs on hundreds of billions of dollars' worth of Chinese goods, with the stated goal of reducing the U.S. trade deficit and bringing jobs back to America. However, these tariffs had unintended consequences that have contributed to inflation and rising costs.

According to a study by the National Bureau of Economic Research (NBER), the tariffs led to significant increases in the prices of goods that American consumers and businesses rely on, such as electronics, clothing, and household items. The study found that the tariffs effectively acted as a tax on American consumers, raising prices by as much as $1,277 per household per year . Instead of benefiting the middle class, the trade war resulted in higher costs for everyday goods, disproportionately affecting low-income families who spend a larger share of their income on necessities.

Furthermore, the trade war disrupted global supply chains, leading to shortages and further price increases. For example, the cost of imported raw materials for U.S. manufacturers rose, forcing companies to pass these costs onto consumers. This disruption has contributed to the inflationary pressures that have persisted even after Trump left office.

2. Tax Cuts for the Wealthy: Ballooning the Deficit and Fueling Inequality

The Tax Cuts and Jobs Act (TCJA) of 2017 was another major policy initiative under Donald Trump. This legislation significantly reduced corporate tax rates and provided substantial tax cuts for the wealthiest Americans. While the administration claimed that these cuts would stimulate economic growth and benefit all Americans, the reality was quite different.

According to the Congressional Budget Office (CBO), the TCJA added nearly $2 trillion to the national debt over a decade . This massive increase in the deficit has put pressure on the federal government to consider cutting essential social programs that many middle-class and low-income Americans rely on, such as Medicare, Medicaid, and Social Security. Additionally, the tax cuts primarily benefited the wealthy, exacerbating income inequality. The Institute on Taxation and Economic Policy (ITEP) reported that by 2027, when many of the individual tax cuts are set to expire, the top 1% of earners would receive 83% of the benefits from the TCJA, while the bottom 60% of households would see little to no benefit.

Moreover, the tax cuts fueled corporate stock buybacks rather than investments in workers or infrastructure. Companies used the extra cash to buy back their own shares, driving up stock prices and benefiting wealthy shareholders but doing little to improve wages or create jobs. This focus on short-term gains for the wealthy has left the middle class and poor struggling to keep up with rising living costs.

3. Deregulation: Short-Term Gains, Long-Term Pain

Donald Trump’s administration pursued an aggressive deregulation agenda, rolling back numerous environmental, financial, and labor protections. While some of these actions were framed as efforts to reduce red tape and spur economic growth, they have had harmful long-term consequences for the middle class and poor.

One significant area of deregulation was in the housing market. Trump’s administration weakened the Consumer Financial Protection Bureau (CFPB) and rolled back rules designed to prevent predatory lending. This deregulation made it easier for risky financial practices to proliferate, contributing to the current housing affordability crisis. According to the Urban Institute, the cost of housing has risen faster than wages for most Americans, with low-income and middle-class families bearing the brunt of this increase.

Additionally, environmental deregulation has led to increased pollution and health risks in low-income communities. The rollback of clean air and water protections disproportionately affects poor and minority communities, leading to higher healthcare costs and reducing the quality of life for millions of Americans.

4. Pandemic Mismanagement: Exacerbating Economic Inequality

Donald Trump’s handling of the COVID-19 pandemic has also had lasting economic repercussions, particularly for the middle class and poor. The delayed and inconsistent response to the pandemic resulted in prolonged economic disruptions, job losses, and business closures.

According to a report by the Brookings Institution, the economic fallout from the pandemic disproportionately affected low-wage workers, many of whom lost their jobs or faced reduced hours. While wealthy Americans were able to work from home and saw their investments grow, millions of middle-class and low-income workers faced economic hardship. The pandemic also exacerbated existing inequalities in education, with low-income students disproportionately impacted by school closures and remote learning challenges.

Furthermore, the inadequate federal response under Trump, including delays in passing relief packages and a lack of clear guidance for businesses, contributed to the uneven economic recovery. The U.S. experienced one of the worst economic contractions among developed nations during the pandemic, with GDP shrinking by 3.5% in 2020, according to the Bureau of Economic Analysis . The slow recovery has made it more difficult for many Americans to regain their financial footing, contributing to the ongoing inflationary pressures.

Conclusion: The Lasting Impact of Trump’s Policies on Inflation and Economic Inequality

Donald Trump’s policies during his presidency have had a lasting impact on the U.S. economy, contributing to the inflation and rising costs that are currently squeezing the middle class and poor. From the trade war with China to the tax cuts for the wealthy, deregulation, and pandemic mismanagement, these decisions have disproportionately hurt those who can least afford it.

As the nation continues to grapple with the consequences of these policies, it is clear that a different approach is needed—one that prioritizes equitable economic growth, supports working families, and addresses the root causes of inflation and inequality. Only by learning from the mistakes of the past can we hope to build a more just and prosperous future for all Americans.

Resources:

1. National Bureau of Economic Research (NBER): "The Impact of the 2018 US-China Trade War on American Consumers" (2019)

2. Congressional Budget Office (CBO): "The Budget and Economic Outlook: 2018 to 2028" (2018)

3. Institute on Taxation and Economic Policy (ITEP): "The Distributional Impact of the 2017 Tax Cuts and Jobs Act" (2020)

4. Urban Institute: "The Housing Crisis and Its Impact on Low-Income Families" (2021)

5. Brookings Institution: "The Impact of COVID-19 on Low-Wage Workers" (2021)

6. Bureau of Economic Analysis (BEA): "Gross Domestic Product, Fourth Quarter and Year 2020" (2021)

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