Investing.com – Newly inaugurated US President Donald Trump has made clear his intention to implement significant changes, including lowering global oil prices, taxes and interest rates. However, Nigel Green, chief executive of deVere Group, one of the world’s largest financial advisory organisations, has expressed concern that these plans could instead cause inflation in the United States rather than suppress it.
Green said the Trump administration’s ambitious fiscal stimulus agenda, tax cuts and aggressive tariff regime are raising expectations of higher inflation. He suggested that these policies, intended to give the economy a short-term boost, could potentially undermine long-term financial stability.
Trump’s proposed tax cuts are expected to significantly decrease federal revenue. At the same time, plans for extensive infrastructure spending and larger defense budgets could inflate the national deficit. Historically, such policies have resulted in price increases as governments pump borrowed money into economies. Additionally, tariffs on foreign-made goods, a key element of Trump’s platform, are expected to increase costs for businesses and consumers.
Green clarified that tariffs are essentially taxes on imports. Companies that rely on global supply chains will likely pass these costs on to American consumers, causing households to bear the burden of these policies through higher prices on everyday products. This, according to Green, is another form of inflationary pressure.
While Trump’s assertive rhetoric has won support from segments of the business community, Green warned that this optimism could quickly diminish if inflationary risks become a reality. He warned that despite Trump’s stated desire to lower oil prices and interest rates, his policy framework appears geared toward achieving the opposite. Market reactions hinting at higher rates could increase borrowing costs for businesses and individuals.
However, Green emphasized that inflation is not inherently negative if managed effectively. Moderate inflation may indicate a healthy economy, but runaway inflation, possibly caused by protectionist trade policies, can erode purchasing power and harm economic growth. He urged investors to prepare for what lies ahead.
DeVere Group advises its clients to consider inflation hedging strategies, including investments in stocks that are likely to benefit from Trump’s new term. Green also urged investors and business leaders to assess the impact of Trump’s policies sooner rather than later, warning that the speed and scale of Trump’s agenda should not be underestimated.
Green’s message was clear: This is a crucial moment for the American economy and global markets. Waiting to see how policies develop could leave investors and companies behind.
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