With better trade deals and tax cuts, Trump can usher in an economic boom

I’ll readily admit it: President Trump’s tariff battles have caused market turmoil, business disruption and a temporary loss of consumer confidence in the economy.

As an economist, I’m nervous about the ongoing trade war — but it could have a major upside. If Trump’s brinksmanship gets our major trading partners to lower their existing tariffs, we could end up with freer trade than we had before.

Meanwhile, the tariff turbulence has largely overshadowed the tremendously positive steps that Trump has taken to promote prosperity here at home — and the unprecedented speed at which he has taken them.

Making the Trump tax cuts permanent

Trump’s 2017 tax cut was an enormous driver of economic success — and contrary to naysayers’ predictions, actually raised revenue for the government.

The average small business saw a 20% reduction in its tax rates, and the corporate rate fell from 35%, the highest in the world, to a below-average rate (now 21%), spurring investment and development. Meanwhile, middle-class families saved on average more than $2,000.

In addition, the 2017 bill was a huge tax simplification measure: It doubled the standard deduction — and now only 9% of Americans itemize deductions on their tax returns, saving them time, tax-preparation fees and stress.

Critics’ accusation that the law merely brought a “tax cut for millionaires and billionaires” is bunk: The share of taxes paid by the richest 1% of tax filers was 40% of the total before the tax cut took effect — and is 44% now.

Under the original 2017 law, the cuts were set to sunset this year, raising rates back to their previous economy-suffocating levels.

A recap of the first 100 days of President Trump’s second term. Donna Grace/NY Post Design

Trump’s bill to make these tax cuts permanent has already passed its first hurdles in the House and Senate and will be on his desk for signature within the next two months.

If Trump gets the corporate tax rate down to 15%, as he has championed, the US would have one of the lowest such rates in the world, attracting billions of dollars of new investment and hundreds of thousands of new high-paying jobs.

Slashing costly regulations

Trump has put an end to Biden’s regulatory assault, which cost the economy an additional $20,000 per family over four years. Trump’s “one-in-for-ten-out” deregulation rule has already saved $2,000 per family, for an estimated savings of about $180 billion so far over four years.

Replacing welfare with work

It’s Economics 101: If you pay people not to work and tax them for working, you’ll reduce output and increase unemployment. The labor force participation rate in March 2024 was just 62.7% — down from 66% 20 years ago. Trump has already started to create new rules requiring able-bodied adults to get a job, or begin a training program, to receive government welfare benefits like food stamps and free health care.

Deploying America’s abundant resources

The US has more than $50 trillion of natural resources that are accessible with existing drilling and mining technologies. Trump’s executive orders are opening up this treasure chest of resources — which could over time raise nearly $10 trillion for the federal government in higher royalties and other tax payments.

Eliminating federal waste and fraud and duplication

Biden’s $6 trillion spending spree pushed government outlays to 40% of our GDP, moving the US inexorably toward socialism.

Elon Musk’s Department of Government Efficiency and the Trump budget team have already identified hundreds of billions of dollars of waste, fraudulent payments, unspent funds and a $350 billion green energy slush fund that can be returned to the Treasury.

Enacting pro-growth immigration policies

Nearly miraculously, Trump has cut illegal border entries by 94%. Now he wants to implement a merit-based system to select future legal immigrants for their skills, talents, investment capital, English-language ability and education, recognizing that almost 40% of US businesses in America are started by immigrants and their children.

He also wants to auction “gold visas,” raising as much as $100 billion, for those who agree to create businesses and jobs in America.

Draining the swamp

Fewer than 10% of our 2.5 million federal workers were working full-time in the office under Biden — even though COVID ended four years ago. Trump has ordered them to . . . show up for work, or be fired. He has already downsized the federal bureaucracy by more than 100,000 employees through buyouts and tougher performance standards, saving the taxpayers millions.

All these are pieces of a larger economic puzzle Trump is constructing. My sources in the White House and in the hierarchies of Congress have outlined their master plan:

First, Trump announces to the world a major and credible trade deal breakthrough. He takes the stage with major trading partners and proclaims that, to restore global commerce, these nations have agreed to lower their tariffs on US goods in exchange for the suspension of US US tariff increases.

A few weeks later, Trump and Republican leaders in Congress announce the passage of a tax bill making the 2017 tax cuts permanent, retroactive to the start of the year, with a new lower business tax rate for good measure.

Finally, congressional Republicans put their petty disputes behind them and agree to a budget framework that cuts $2 to $4 trillion of waste, fraud and redundancy out of the $7 trillion budget over the next decade, without benefit cuts or reductions in vital and popular services.

Paying dividends

This would be the greatest and most bullish triple play in economic history. The stock market would surge, the dollar would soar and interest rates on 10-year Treasury bonds might retreat by a full percentage point or more.

America’s economy wouldn’t just be great again, but mightier than ever before.

The success of this plan has many speed bumps, starting outside the US. Foreign leaders — including China’s Xi Jinping — must come to the rational conclusion that trade deals lowering unsustainable tariffs and non-tariff barriers are in everyone’s interest.

The financial chaos of the past two months has hurt the US for sure. But the pain has been even more severe in Beijing — where the economy is imploding — and in Europe.

Meanwhile, Republicans have no choice but to cut the deficit and extend the tax cuts. Failure is not an option, so get your game face on, ladies and gentlemen.

Continuing the trade war is a fool’s errand. The solution is within Trump’s grasp.

Who else but Trump — with his recurring habit of proving his critics wrong — could pull it off?

Stephen Moore is a co-founder of Unleash Prosperity and a former Trump economic adviser who is co-author of “The Trump Economic Miracle.”