In a bold and contentious move, former US President Donald Trump has pinpointed high levels of immigration as a primary driver of America's soaring inflation, setting the stage for a dramatic economic policy shift should he win a second term.
Speaking exclusively to The Independent, Trump outlined a starkly different approach to that of the current Biden administration and the Federal Reserve. He argued that their strategy of aggressively hiking interest rates is a misguided solution that unfairly penalises American homeowners and consumers.
A Controversial Diagnosis
Trump's economic thesis is simple yet divisive: an influx of immigrants entering the workforce suppresses wages and simultaneously increases demand for housing and goods, creating a perfect storm for rising prices. "I believe the number one problem we have is not interest rates; it's immigration," he stated.
This perspective directly challenges the conventional economic wisdom employed by central banks worldwide, which have used interest rate hikes as their primary tool to cool inflation.
The 'Trump Plan' Versus The Fed
The former President was highly critical of Federal Reserve Chairman Jerome Powell, suggesting a lack of political independence. "He's political because he wants to do something for the Democrats... I think he's going to do something to probably help the Democrats, I think, if that's possible," Trump claimed, casting doubt on the Fed's neutrality.
Instead of continuing down the path of rate hikes, Trump promised an alternative: a drastic crackdown on immigration. His proposed measures include:
- Initiating the largest domestic deportation operation in American history.
- Reinstating and expanding his first-term travel ban.
- Halting what he describes as the "invasion" of migrants at the southern border.
He believes this aggressive reduction in the labour supply will naturally curb inflation without the need for further punishing interest rate increases that risk triggering a recession.
Echoes of a Bygone Era
This proposed policy harks back to economic strategies not widely seen since the early 20th century. By focusing on labour supply constraints, Trump is advocating for a return to a form of economic management that most modern economists have long abandoned in favour of monetary tools controlled by independent central banks.
As the 2024 election looms, Trump's comments signal a potential upheaval in US economic policy, framing immigration not just as a cultural or security issue, but as the central lever for controlling the nation's economic health.
