During the presidential campaign, Donald Trump claimed to lower “the price of everything.”
He’s going to learn how difficult that will be.
The government has limited options for lowering prices across the board, short of significantly slowing economic activity and risking a recession. It might be difficult to discover measures that will cut prices in certain categories, such as grocery.
In a five-paragraph executive order issued during his first week back in office, Trump indicated that he plans to prioritize deregulation as a cost-cutting measure. However, while this may increase business profits and, in certain situations, economic development, it does not ensure that corporations would lower prices.
Trump also claims he is committed to keep the cost of living under control while urging the Federal Reserve Board to cut interest rates. However, the Fed, which is anticipated to leave interest rates unchanged at its meeting on Wednesday, appears determined to using higher borrowing costs to keep inflation under control.
“If it was so simple, they would just do it,” Norbert Michel, a vice president of the libertarian Cato Institute, said of price reductions.
For Trump, the stakes are enormous. Lowering the cost of living was a key component of his reelection campaign, and it remains a pressing economic issue for many struggling American households.
However, he is already confronted with the practical difficulties of carrying out a fundamental point he made to voters regarding a politically significant consumer staple: the price of eggs has risen in recent weeks as a result of an outbreak of avian flu that has killed millions of hens and caused the killing of others.
There are also inherent contradictions with corporate America in what he offers voters. He has committed to enhance oil output in order to lower gasoline costs. However, oil corporations, who are reliant on worldwide pricing, are often only encouraged to raise output when prices rise.
While the United States theoretically has the potential to produce more oil, “there’s a split here between physical capacity and what’s economically likely to happen,” said Rory Johnston, an oil market analyst at research firm Commodity Context.
“The only thing that’s going to get you more production is higher prices,” said the economist.
At the same time, the administration is considering broad duties on items from all of the United States’ trade partners, triggering more cost increases.
Meanwhile, there are early indications that customers are skeptical: According to an Associated Press-NORC Center for Public Affairs Research poll, the majority of Americans do not believe the government will succeed in decreasing prices.
When asked about Trump’s efforts, Vice President JD Vance told CBS’ “Face the Nation” that the administration intends to boost salaries relative to prices, a method of reducing cost burdens that economists believe is far more advantageous to the economy in the long run than aggressively lowering prices.
According to the Bureau of Labor Statistics, inflation-adjusted salaries increased by 1% in 2024, after falling for much of Joe Biden’s administration.
However, Vance insisted that Trump will eventually reduce the burden on Americans.
“Prices are going to come down, but it’s going to take a little bit of time,” he told reporters.
White House deputy press secretary Anna Kelly told HEADLINESFOREVER that Trump took action on day one “to unleash American energy, which will drive down costs for families across the country.”
“He has already ended the failed economic policies of the past four years that skyrocketed inflation, which were rubber-stamped by the Democrats,” she told reporters.
Still, even Trump admitted to Time Magazine last month that “it’s hard to bring things down once they’re up.”
There are some ways in which his administration may moderate, if not reverse, price increases, but even those options would be difficult.
For example, the executive order notes Trump’s desire to increase the nation’s housing supply, which might help alleviate a shortfall that has resulted in an affordability issue. However, such development is hampered by state and municipal laws outside the federal government’s authority, and it is uncertain how Trump will continue.
Progress in reducing avian flu may also help to reduce food inflation.
Meanwhile, high borrowing prices, which the Fed uses to control inflation, exacerbate the burden on American consumers, such as those trying to purchase a home or a car.
Inflation has slowed significantly since peaking in June 2022, but progress has halted in recent months, indicating that the Fed may maintain rates constant for the time being. An attempt to drastically decrease interest rates from present levels risks allowing prices to increase more quickly.
“I also want low prices and low interest rates,” added Martha Gimbel, who worked as an economist in the Biden White House until early 2023. “That’s not the world that we’re in right now.”