Trump’s economic program would weaken the US – and Australia

It’s time to take Donald Trump seriously. Betting markets say it’s as likely as not he will be elected US president in four weeks.

And unlike in 2016 when his program wasn’t clearly defined, he has set out plainly what he intends to do. Which means it’s possible to model the consequences.

The three Trump promises with the greatest economic impact are

• the deportation of millions of US residents
• steep restrictions on imports, especially from China
• presidential influence over interest rates.

The best way to model the consequences is with an established model of the kind used by the International Monetary Fund and central banks around the world rather than one set up for the purpose that could be seen as designed to favor or not favor Trump.

The Washington-based Peterson Institute for International Economics has just done that, noting that during Trump’s first term as president he “by and large” did what he said he would do.

It finds

No other country in the world would be hurt by Trump’s program as much as the US – not even China – although several US allies would suffer, including Australia, which would be the fourth-worst hit by the most extreme version of what Trump is proposing.

Mass deportations

Trump has repeatedly promised the “largest domestic deportation operation in American history,” targeting up to 20 million unauthorized immigrants, including about 8.3 million thought to be in the workforce.

He says his model is Operation Wetback – a 1956 Eisenhower administration program that used military-style tactics to deport 1.3 million Mexicans.

The institute says Eisenhower’s success makes it easy to believe Trump could remove 1.3 million immigrant workers. It has modeled two scenarios: removing 1.3 million and 8.3