LARRY KUDLOW: There's nothing inflationary about Trump's "America First" platform

Open borders are not a pro-growth labor tool, Kudlow says

There's nothing inflationary about Trump's "America First" platform and that's the subject of the riff. 

If Donald Trump's economic policies generated less than 2% inflation during his first term, why is it that people on Wall Street and elsewhere keep telling us those same policies in a second term will be inflationary? I don't get it. Where's the logic?

In his first term, Trump slashed the corporate tax rate, executed across the board regulatory red-tape relief, promoted fossil fuel production, fought unfair trading practices and kept our southern border relatively closed. The average inflation rate over his entire four-year term was 1.9% at an annual rate. The sum-total of consumer price increases was 7% for four years! 


Now, reading through Mr. Trump's newly released platform, under "Chapter 3: Build the Greatest Economy in History," his agenda rests on five pillars: slashing regulations, cutting taxes, securing fair trade deals, "drill, baby, drill," and, importantly, keep the U.S. dollar as the world's reserve currency (a.k.a. -- King Dollar!) So, tell me again where the inflation is going to come from? 

If Mr. Trump's trade policy is reciprocity, slapping tariffs on countries with unfair trading practices, that's not going to cause inflation. Consumers will boycott high prices, forcing businesses to cut back on their margins, or Chinese companies, for example, will have to cut their prices and profit margins. That's not inflationary. 

The only real cause of inflation is if the Federal Reserve starts printing boatloads of excess money, but if Mr. Trump wants the American dollar to be "America First" in world currency markets, that's not going to permit the Fed to go berserk in creating unwanted dollars. 

By the way, in Mr. Trump's platform documents, he talks several times about curbing unnecessary and wasteful spending. Again and again, the platform talks about defeating inflation and, as he turns the fossil spigots back on, oil prices could drop closer to $40 a barrel than to $85 to $100 a barrel. That is major league counter inflation and preserving Mr. Trump's corporate tax cuts, as well as restoring capital depreciation bonuses -- that will raise real worker wages, as it did in the first term, and enhance productivity as a result of the buildup of innovation and investment. 

That whole process is counter inflationary. Stopping Mr. Biden's border catastrophe will restore law and order and public safety and that is like a tax cut for families and small businesses, which is always counter inflationary. 


Meanwhile, open borders are not the pro-growth labor tool that some left-wing economists think it is, but it sure has increased federal, state, and local spending on food, housing, and healthcare, crowding out traditional entitlements, and raising prices in many of those areas. Especially housing! 

I remember the so-called smart money on Wall Street was opposed to Donald Trump back in 2016 and thought his corporate tax cuts would just boost deficits and inflation. They were wrong then, and they are wrong again now. 

This article is adapted from Larry Kudlow’s opening commentary on the July 9, 2024, edition of "Kudlow."