Australian economist Warwick McKibbin, a former Reserve Bank of Australia board member, warns that tariffs are only part of the picture and that this is the beginning with the US economy problems.
Reasons for US Economy Deeper Slowdown
Here are five reasons why mass deportations of immigrant labour and attacks on the independence of the Federal Reserve could trigger a deeper slowdown than trade barriers alone.
1. Labour Shortages in Key Industries
Mass deportations would remove millions of workers from agriculture, construction, hospitality and healthcare, creating severe labour shortages and higher costs for businesses.
2. Higher Inflation and Lower Productivity
Losing immigrant labour would push wages up but reduce productivity, feeding inflation while weakening overall economic output.
3. Disrupted Supply Chains
Removing a large portion of the workforce could slow production and distribution across critical supply chains, undermining growth more than tariffs alone.
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4. Undermining the Federal Reserve’s Independence
If monetary policy is pressured or politicised, it risks eroding investor confidence, weakening the US dollar and raising borrowing costs.
5. Amplified Policy Shocks
Tariffs by themselves may dent GDP growth, but combined with immigration crackdowns and Fed interference they create a powerful, destabilizing shock that could tip the US economy into recession.
After all the problems around, will Trump change his strategy? or things will continue this way?
