The U.S. economy May Be Entering a Phase of "High Inflation, High Interest Rates, and a Strong Dollar”

Abstract: On November 6, Donald Trump, the Republican presidential candidate, announced his victory in the U.S. presidential election. This article examines the prospects for implementing Trump’s core policy proposals and their potential impacts, with the following key conclusions:

First, if Trump’s policies are fully enacted, the U.S. economy is likely to experience a phase of "high inflation, high interest rates, and a strong dollar," along with increased uncertainty regarding the Federal Reserve's monetary policy. Second, tariffs could become a key bargaining chip in U.S. diplomacy. While a 60% tariff on Chinese imports seems unlikely, a 10%-20% increase in tariffs is more probable. Third, China is likely to take a "flexible approach" to handling U.S. tariff increases, and the RMB exchange rate is unlikely to exceed previous highs.