Trump vowed to address a major issue, but may end up exacerbating it.

The American people were not happy with the high inflation rates and it played a key role in getting Donald Trump re-elected as the President. However, there are concerns that his policies may cause inflation to rise even further.

During his campaign, Trump frequently brought up the rising cost of living, promising to bring back the more favorable conditions that existed during his first term. His rallies were filled with signs declaring "Trump will fix it". But now that he has won the election, economists are raising red flags about the potential consequences of his promises.

Shane Oliver, the chief economist of AMP, wrote that Trump's policies could lead to inflation and negatively impact the growth of the US. His proposed trade policies, which could lead to a global trade war, are also a cause for concern. These warnings have been issued long before the election, with 16 Nobel Prize-winning economists signing an open letter stating that Trump's policies will have long-lasting economic repercussions.

One of the major concerns is the implementation of high tariffs on imported goods. Trump has openly expressed his admiration for tariffs, calling it his favorite word. He has proposed a tariff of 10 to 20 percent on all imports and up to 60 percent on goods made in China. While he claims that the cost will be borne by the countries making the goods, the reality is that it will most likely be passed on to consumers, resulting in higher prices.

Ivan Colhoun, the chief economist of CreditorWatch, believes that these tariffs will have a significant impact on inflation, especially since they are being implemented during a time of low inflation. This may not be good news for Australian consumers, who are just starting to see inflation return to its target rate. However, there may be no direct impact on the Australian economy as a result of Trump's policies, according to AMP deputy chief economist Diana Mousina. She explains that the rise in inflation in Australia is being driven by domestic factors, not changes in US politics.

Australia may also be in a better position to handle the tariffs, as it imports more goods from the US than it exports. However, there is some concern about the potential impact on China, which is Australia's largest trading partner. If the high tariffs lead to a slowdown in the Chinese economy, it could result in reduced demand for Australian exports. But Treasurer Jim Chalmers and Mousina both believe that Australia has the ability to navigate any uncertainties that may arise when Trump takes office on January 20.

Mousina also cautions against making any concrete predictions about the impact of Trump's policies on the economy, as there are still many unknown factors. She reminds us that we should take Trump's words seriously but not necessarily literally, and that making specific forecasts at this point is difficult. So, while there may be some cause for concern, it's not yet time to panic.

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