Donald Trump’s pre-election economic agenda has two weak points, which may prove to be its “Achilles heel” and significantly limit its degree of implementation.

The first is the announcement for single customs duty 60% on all Chinese products and 10-20% on product imports from other countriesincluding the 27 countries of the European Union. The goal of this policy is to protect American businesses from international competition, as imported products will become more expensive. The assumption being made is that in this way the growth of the American economy will be strengthened, while at the same time there will be significant revenues for the severely deficit state budget.

Such unilateral moves, however, lead to retaliation from the other countries, leading to trade wars and experience has shown that no country emerges victorious from trade wars. In addition, tariffs will have a negative impact on inflation as US consumers will pay higher prices for foreign goods, while US businesses will see their costs for raw materials or intermediate goods rise,

That’s why there is modest optimism in the European Union that there is a chance for talks with the new administration in Washington to avoid a mutually damaging trade war. Instead of tariffs, Brussels will propose bilateral deals, such as for greater imports of US LNG (liquefied natural gas) needed by the EU after it becomes dependent on Russian gas flows.

The second weak point of Trump’s campaign agenda is the huge US public debtwhich in 2024 is estimated to will reach 36 trillion. dollars or 123% of the country’s GDP, with an upward trend. In his report on the US economy a few months ago, the International Monetary Fund warned Washington that he should take measures to contain the debt, recommending a gradual increase in income tax.

The Fund highlighted the risks posed by the debt for the world economy, but also for the American economy. Because the US may be able to refinance its debt due to its status as a world power, but this is done at higher interest rates. In addition, credit rating agencies have downgraded their credit rating, which is no longer in the top tier (AAA).

During his election campaign, Trump promised to maintain after 2025 the tax cuts that he had promoted in his first term, but also new reliefs, such as the reduction of the corporate rate from 21% to 15%. If these announcements were received in cash they would add 7.75 trillion. dollars to the U.S. public debt over the next 10 years, according to an estimate by the bipartisan Congressional Budget Office.

With the Republican Party securing control of both chambers of Congress – the Senate and the House of Representatives – Trump will have more freedom of movement on taxation as he will not be at risk of a Democratic roadblock on his bills. However, several Republican congressmen and senators have expressed concerns about the debt, and there may be intra-party objections that would lead to a partial reversal of Trump.

Tax cuts would be easier if there was an effort to contain or reduce spending to limit the additional debt from the president-elect’s fiscal policy. However, the experience of the last decades has shown that the efforts made by various governments – including the first Trump administration – in this direction have failed, under the weight of the reactions caused in such cases.

The president-elect announced last week the formation of an informal ministry, or advisory committee, whose role will include recommending spending cuts and reorganizing or eliminating federal agencies and agencies.

One of the two heads of DOGE is Tesla CEO Elon Musk, who claimed during the pre-election campaign that he would cut public spending by at least 2 trillion. dollars. From words, however, to action, the distance is very long.