Investing.com – The new US president Donald Trump has made clear his intention to implement important reforms that include lower global oil prices, taxes and interest rates. However, Nigel Green, CEO of the deVere Group, one of the largest financial advisory organizations, expressed concern that these plans may instead cause inflation in the US rather than suppress it.
Green said the Trump administration's ambitious stimulus agenda, tax cuts, and tougher tax controls are leading to higher inflation expectations. He suggested that these policies, aimed at providing a short-term boost to the economy, may undermine long-term financial stability.
Trump's proposed tax cuts are expected to significantly reduce federal revenue. At the same time, large infrastructure spending plans and an increased defense budget could increase the national deficit. Historically, such policies have caused inflation as governments pumped the economy with borrowed money. In addition, tariffs on foreign-produced goods, a central theme of Trump's platform, are expected to raise costs for businesses and consumers.
Green explained that tariffs are essentially taxes on imports. Businesses that rely on global networks can pass these costs on to American consumers, resulting in households bearing the burden of these policies through higher prices for everyday goods. This, according to Green, is another form of inflationary pressure.
While Trump's rhetoric has drawn support from business sectors, Green warned that this optimism could quickly diminish if inflationary risks materialize. He warned that despite Trump's stated desire for lower oil prices and interest rates, his policy framework appears to be aimed at achieving the opposite. Market responses indicating higher rates can increase the cost of borrowing for businesses and individuals.
However, Green emphasized that inflation does not affect nature if it is managed properly. Moderate inflation may indicate a healthy economy, but uncontrolled inflation, perhaps caused by protectionist trade policies, can erode purchasing power and hurt economic growth. He urged investors to prepare for the future.
The DeVere Group advises its clients to consider inflation strategies, including investing in stocks that could benefit from the new Trump era. Green also urged investors and business leaders to assess the impact of Trump's policies sooner rather than later, warning that the speed and magnitude of Trump's agenda should not be underestimated.
Green's message was clear: This is a critical time for the US economy and global markets. Waiting to see how policies play out could leave investors and businesses behind.
This article is powered by AI and updated by an editor. For more information see our T&C.