- Donald Trump campaigned on import tariffs and mass deportations to win the presidency.
- Nobel Prize-winning economist Simon Johnson doesn't think these policies will benefit the economy.
- Johnson is skeptical about the feasibility of implementing these policies as well.
President-elect Donald Trump made tariffs and mass deportations a cornerstone of his winning campaign. But according to Simon Johnson, an economist at the Massachusetts Institute of Technology and a co-winner of the 2024 Nobel Prize in Economics, Trump will have a hard time delivering on these promises.
Trump has proposed a 60% tariff on goods imported from China, combined with a 10-to-20% tariff on all other imports. And just this week, Trump confirmed on Truth Social that he plans to declare a national emergency and mobilize the military to carry out mass deportations.
"We've heard the rhetoric. Let's see what the reality is," Johnson told Business Insider in an interview.
To Johnson, whose work specializes in how institutions impact a country's prosperity, Trump's tariff and immigration plans are simply bad policies for the US economy — not to mention logistically impractical.
Trump won't go through with tariffs
Trump may think "tariff" is the most beautiful word in the dictionary, but not everyone shares his enthusiasm, least of all Johnson. Economists and market experts alike have been warning about the negative impacts of tariffs, such as increasing prices for consumers and driving up inflation.
The people worst hit by tariffs will be working-class Americans, according to Johnson. Tariffs make it more expensive to import goods to the US, and companies often end up passing the cost increases down to customers. They're also most likely to be imposed on basic consumer products such as shoes, clothing, and household goods, as many of these products are manufactured outside of the US. As a result, poorer Americans who spend a higher percentage of their income on these items will bear the brunt of import tariffs.
"I'm skeptical he'll actually do it," Johnson said of Trump's tariff policy. The consequences of such a policy could lead to inflation accelerating back up again, in his view. According to Jan Hatzius, Goldman Sachs' chief economist, an across-the-board tariff on all imports could increase prices by 1.2%.
With all of these negative implications, Johnson isn't convinced that Trump's tariffs will be as drastic as they were presented on the campaign trail. Instead, Johnson believes it's more likely that Trump is using the threat of tariffs as a negotiation tactic with China and American companies with operations in China.
The issue with this line of reasoning is that tariffs actually won't bring many jobs back to the US, in Johnson's view. "Most of them are moving to Vietnam or Mexico," Johnson said of companies with operations in China. "If they come back to the US, it'll be with highly automated facilities," he added.
Mass deportation is a logistical nightmare
Trump's mass deportation plans don't make economic sense to Johnson, either.
"Mass deportation of illegal immigrants could be incredibly disruptive," Johnson said. Deporting millions of people would exacerbate the ongoing shortage in the labor market, leaving essential job openings unfilled. It would also lead to decreased consumption and spending activity among consumers. Both of these impacts would negatively impact the US economy.
Economics aside, carrying out a large-scale deportation plan isn't feasible, according to Johnson. Since being elected, Trump has appointed Thomas Homan to lead deportation efforts as "border czar," but the details of how deportations will be carried out have yet to be revealed.
Johnson sees many potential pitfalls for a mass deportation initiative. Law enforcement across the country is mostly in state and local hands, making it difficult to regulate from a federal level, according to Johnson. Deporting millions of people would also require lengthy legal proceedings, as immigrants who are in the US illegally have the right to due process. Mass deportations would require dramatically expanding the immigration court system, which has been experiencing backlogs for years. That's not to mention the price tag of deporting millions of people and losing out on tax revenue: the American Immigration Council estimated it would cost the federal government over $315 billion.
The whole process would be incredibly tricky to navigate legally. "What if you arrest the wrong people?" Johnson pointed out. "In the US, if you arrest the wrong people and subject them to inappropriate and unpleasant treatment, you will have to pay damages."
"I just don't understand how that would work within the rule of law and environment of the United States," Johnson added.
It's still too early to predict how Trump's policies will pan out, but for now, Johnson is seeing drastic barriers to Trump's tariff and immigration plans. Not only are they undesirable policies for the economy and American consumers, but they're also unfeasible to carry out.
Should Trump go through with his tariff and immigration policies, it'll be up to the American people to judge their efficacy and implementation.
"There will be an attempt to change a lot of things about American society," Johnson said. "And then we'll see how people feel about that in the midterm elections."