Tariffs and tax cuts amid high interest rates and lingering inflation will pose a test for the U.S. economy.
President-elect Donald J. Trump is poised to embark on an economic experiment that has never been tested as he prepares to carry out an agenda of tax cuts and tariff increases while interest rates are high and prices remain elevated.
As he retakes the White House on Monday afternoon, Mr. Trump has pledged to move quickly to enact universal tariffs, cut regulations that will increase domestic energy production and push Congress to pass another round of tax cuts.
Incoming administration officials said Mr. Trump would sign a blitz of executive orders on Monday that would open up oil and gas drilling in Alaska, end Biden administration policies that encourage the adoption of electric vehicles and take an “all of government approach” to curbing inflation.
Mr. Trump’s early moves reflect the fact that the U.S. economy is in a much different place than the one he inherited in his first term eight years ago, when inflation was low amid a long post-recession economic expansion.
Mr. Trump will instead oversee an economy that many economists expect to slow this year and next. Inflation has eased, but consumer prices are more than 20 percent higher than they were when he left office. The national debt exceeds $36 trillion, and a fight in Congress over raising the nation’s borrowing cap looms this year.
Economists remain skeptical that Mr. Trump’s mix of policies will have their intended effects.
“We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy,” Paul Ashworth, the chief U.S. economist at Capital Economics, wrote in a research note.