By In just a few days, Americans will decide one of the most consequential elections in recent history.
Donald Trump is aiming to return to the Oval Office, bringing with him bold and aggressive economic policies that he believes will prioritize American industry and independence.
Kamala Harris, coming from a more passive role as vice president, plans to build on Biden-era policies with a focus on sustainability and middle-class support.
Here’s a closer look at what the US economy might look like under each candidate, covering key themes from taxes and inflation to trade, labor, and energy.
Taxes and the stubborn debt problem
Trump’s tax policy centers on bold cuts, which would extend all reductions from the 2017 Tax Cuts and Jobs Act and push the corporate tax rate to 15%.
He proposes eliminating federal taxes on tips, Social Security, and overtime pay, moves aimed at easing tax burdens on Americans across income levels. However, these cuts come at a steep cost.
Estimates from the Committee for a Responsible Federal Budget show Trump’s proposals would add between $5.8 to $7.8 trillion to the national debt over the next decade, and could push the debt-to-GDP ratio to a worrying 116% by 2028.
These debt levels risk straining fiscal stability, as increased government borrowing costs could force difficult trade-offs.
To offset these cuts, Trump suggests reductions in “wasteful spending” and claims revenue from ramped-up tariffs and energy production could help fill the gap.
However, many economists are skeptical, fearing this approach will ultimately leave the government with massive borrowing costs and an unsustainable debt burden.
Harris proposes a more balanced fiscal strategy.
She pledges to maintain tax cuts for those earning under $400,000, while rolling back cuts for the wealthiest Americans and increasing the corporate tax rate to 28%.
Her approach aims to bring a more sustainable rise in debt, with projections showing a debt-to-GDP ratio of around 109% by 2028, which aligns more closely with current baseline forecasts.
Harris also plans to enhance tax credits for families, particularly through permanent child and earned income tax credits, benefiting nearly 100 million Americans.
Harris’s debt trajectory remains high, but her moderated tax policies are less likely to lead to runaway borrowing costs.
Her approach appeals to those looking for middle-class tax relief without risking extreme debt increases.
Trade policies and tariffs
Trump’s trade policies are among the most assertive in modern US history.
His plan includes baseline tariffs of 20% on all imports, with some goods from China facing tariffs as high as 60%.
Trump’s strategy aims to prioritize American manufacturing by discouraging foreign imports and enhancing tariff revenues.
However, research from the Peterson Institute suggests that these tariffs could raise consumer prices significantly and hurt US manufacturing sectors that rely on imported materials.
Tariffs also risk sparking trade wars, particularly with China, which could hurt US exporters through retaliatory tariffs.
Bloomberg Economics finds that a maximal version of Trump’s tariff plan could reduce GDP by 0.8% and push prices up by 4.3% by 2028 if only China retaliates.
If other countries join in, these figures could drop US GDP by 1.3% and increase prices by 0.5%, as retaliatory tariffs would further dampen US. exports and hurt overall growth.
Harris is wary of broad tariffs and has openly criticized their inflationary impacts on American families.
While she supports certain tariffs to protect US interests, her approach emphasizes stability and preserving alliances.
She has suggested revising the USMCA to better protect US workers, targeting improvements in labor rights and competitive protections rather than imposing blanket tariffs.
Harris’s focus on reducing trade costs and protecting American workers aims to keep prices stable, providing relief from Trump’s high-tariff approach.
Labor and immigration policies
Trump’s immigration policy includes plans for mass deportations of up to 8.3 million undocumented immigrants, which would directly impact sectors such as agriculture, construction, and hospitality.
By reducing the labor force, these policies risk driving up wages to attract replacement workers, raising costs for businesses and consumers alike.
Bloomberg Economics estimates that deporting millions of workers could shrink the economy by over 3% by 2028 due to labor shortages.
This strategy could disrupt immigrant-heavy industries, force business closures, and ultimately drive up inflationary pressures as labor supply decreases.
Harris supports current immigration laws with an emphasis on stability, avoiding mass deportations that could disrupt key industries.
She has signaled support for enhanced border security but lacks the aggressive deportation policies Trump proposes.
By maintaining a steady labor supply, Harris’s policies aim to protect the workforce in immigrant-heavy sectors, helping to keep consumer prices stable and preventing economic contraction.
Energy: Fossil fuels vs. renewables
Trump promotes extensive fossil fuel production with a motto of “drill, baby, drill”, aiming to enhance American energy independence and dominance without much regard for environmental repercussions
By reducing regulations and increasing drilling leases, he promises to make energy more affordable.
Yet, energy experts warn that oil prices in the US are largely set by global markets, so increased drilling alone may have limited impact on prices.
His plans also raise environmental concerns, with increased fossil fuel dependence potentially slowing the transition to clean energy.
He has also expressed intentions to withdraw from the Paris Agreement, reflecting a dismissive attitude towards global climate change initiatives.
Harris on the other hand supports a shift toward renewable energy, extending Biden’s subsidies for renewables, with a focus on reducing long-term energy costs through clean energy investments.
Although renewable energy investments require more upfront costs, they hold the potential to reduce energy volatility.
Harris’s plans for permitting reform in renewable projects aim to make clean energy more accessible, setting the US on a gradual but sustainable path toward energy independence.
What about the cost of living?
Trump’s policies carry significant inflationary risks. First of all, his ambitious tax cuts, combined with continued government spending, would certainly increase borrowing.
Given the large amounts of debt, monthly interest payments are set to climb, making it tempting to pressure the Federal Reserve to keep interest rates low.
Trump has stated a preference for having more presidential oversight of the Fed, even proposing that he would make a “better Fed chair.”
If Trump pressures the Fed to maintain low rates, inflation risks increase, as the market might respond to this lack of Fed independence by accelerating price increases.
The result could be a shift toward prolonged inflation, a situation where interest rates remain too low for too long.
His plan to reduce grocery costs involves restricting food imports to support domestic farming—a policy that aligns with his broader goal of using tariffs to protect US industries.
Trump’s tariffs could further intensify inflation, particularly on essential goods.
His baseline 20% tariffs on all imports and up to 60% on Chinese goods would raise prices for everything from food to household appliances.
Economists caution that consumer costs could spike, with the Tax Policy Center estimating an additional $1,350 in annual expenses for middle-income households.
Trump’s plan to restrict food imports to boost domestic farming may also contribute to inflation by limiting supply and raising prices.
Harris’s approach aims to contain inflation by balancing controlled spending with targeted support.
Her plan to implement a federal ban on grocery price gouging during national emergencies may help manage food costs in times of crisis, though it’s unlikely to impact prices outside of emergencies.
In addition, Harris has proposed a federal ban on grocery price gouging during emergencies, targeting high costs in food prices specifically.
While experts caution this may only help in times of crisis, Harris’s overall economic approach aims to keep inflation manageable by balancing tax adjustments and targeted social programs, offering relief without driving up prices across the board.
Harris’s policies on drug prices, such as expanding the Inflation Reduction Act to cap drug spending and monthly insulin costs, could provide relief for healthcare-related expenses.
By keeping essential prices in check without extreme debt or aggressive tariffs, Harris’s inflation strategy aims to support purchasing power without risking widespread price increases. In practice however, it is still unclear how she would be able to achieve this.
What does the future look like?
The U.S. economy under each candidate would take very different trajectories.
Trump’s approach is bold and aggressive, promising low taxes and protective tariffs to shield American industries.
However, his policies risk increasing inflation, raising consumer costs, and pushing the national debt to historically high levels.
His ambitions to influence the Fed could create long-term inflationary pressure, especially if tariffs and debt-fueled spending become his primary tools for growth.
Trump’s past unpredictability—often announcing economic policies spontaneously—adds to concerns among analysts who believe this approach could inject volatility into the business environment and hinder long-term stability.
What’s certain is that his skepticism of globalization has permanently shifted the US economic landscape, with implications for multilateralism and global trade structures.
While this shift is intended to protect domestic industries, the costs of trade conflicts and isolationist policies may lead to higher prices and erode competitiveness abroad.
Harris, while not yet tested as president, presents a more moderate vision with an emphasis on middle-class support and sustainable growth.
Her preference for renewable energy, cautious debt increases, and stable trade policies would likely lead to a more predictable economic environment.
While her policies may not deliver immediate high growth, they aim to provide stability without threatening long-term fiscal health.
It is also worrying that Harris has still not proposed any tangible actions on her plans, leaving many economists concerned about the viability of her plans.
In short, a Trump presidency would bring aggressive moves that could stimulate growth but might destabilize prices and debt.
Harris’s vision, while slower and more controlled, targets steady support for the middle class, offering sustainability and inflation control as key economic pillars.
It’s only a matter of days before we find out the next leader of the world’s largest economy.
The post What would the US economy look like under a Donald Trump or Kamala Harris presidency appeared first on Invezz
