Investing.com — The newly inaugurated US President Donald Trump has made clear his intent to implement significant changes including lowering global oil prices, taxes, and interest rates. However, Nigel Green, CEO of deVere Group, one of the world’s largest financial advisory organizations, has expressed concerns that these plans could instead ignite inflation in the US rather than suppress it.
Green stated that Trump’s administration’s ambitious fiscal stimulus agenda, tax cuts, and aggressive tariff regime are leading to expectations of higher inflation. He suggested that these policies, aimed at providing a short-term boost to the economy, could potentially undermine long-term financial stability.
The proposed tax cuts by Trump are anticipated to significantly decrease federal revenue. Concurrently, plans for extensive infrastructure spending and increased defense budgets could inflate the national deficit. Historically, such policies have resulted in price increases as governments pump economies with borrowed money. Moreover, tariffs on goods manufactured overseas, a key element of Trump’s platform, are expected to increase costs for businesses and consumers.
Green clarified that tariffs are essentially taxes on imports. Businesses that depend on global supply chains will likely pass these costs onto American consumers, resulting in households bearing the burden of these policies through higher prices on everyday goods. This, according to Green, is another form of inflationary pressure.
While Trump’s assertive rhetoric has garnered support from segments of the business community, Green cautioned that this optimism could rapidly diminish if inflationary risks become a reality. He warned that despite Trump’s stated desire for lower oil prices and interest rates, his policy framework seems to be geared towards achieving the opposite. Market reactions hinting at higher rates could increase borrowing costs for businesses and individuals.
However, Green emphasized that inflation is not inherently negative if managed effectively. Moderate inflation can indicate a healthy economy, but uncontrolled inflation, possibly triggered by protectionist trade policies, can erode purchasing power and harm economic growth. He urged investors to prepare for what lies ahead.
DeVere Group is advising its clients to consider inflation-hedging strategies, including investments in stocks that are likely to benefit from Trump’s new term. Green also urged investors and business leaders to assess the impact of Trump’s policies sooner rather than later, warning that the speed and scale of Trump’s agenda should not be underestimated.
Green’s message was clear: This is a crucial time for the US economy and global markets. Waiting to see how policies unfold could leave investors and businesses lagging behind.
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