In addition to the restrictive impact of any reduction in federal spending in the United States, investors will carefully monitor the net effect of contradictory policies.
The passage of the law nicknamed “Big Beautiful Bill” will stimulate, in itself, medium -term growth. However, the erratic customs duties policy will slow down all growth. Customs duties are a de facto tax on consumers and businesses, and will therefore have a restrictive effect. In addition to the restrictive impact of any reduction in federal expenses, while Congress is struggling to implement the reductions recommended by the DOGE, investors will carefully monitor the net effect of these contradictory policies.
The decision -makers of the fiscal policy, faced with the complexities of the sustainability of the debt, find themselves in a precarious situation. The new tax law adopted should be an expansionist, stimulating economic growth in the medium term. However, this positive effect can be overshadowed by the combined impact of customs duties, which mainly have an increase in taxes, and significant reductions in federal subsidies and other expenses.
Customs duties increase the cost of goods, reducing the purchasing power of consumers, and could slow down global economic activity. In the meantime, if the congress promulgated even a reduction in expenses proposed by the DOGE, the reductions in federal subsidies (and other expenses) would limit growth even more. Although these measures aim to gradually reduce the budget deficit, they may create a paradox. As deficit levels decrease, growth could slow down and exacerbate the budgetary difficulties that political decision -makers seek to mitigate.
In this issue of balancingist, it is essential that decision -makers carefully assess the implications of their decisions. A strong slowdown in growth could inadvertently worsen already significant budget deficits, resulting in an economic stagnation cycle.
Do not hesitate to emphasize the importance of granting priority to long -term stability compared to short -term gains. If concerns about fiscal viability persist, this could create a limit of the reduction in borrowing costs, even if the federal reserve begins to reduce rates, which would prevent political decision -makers from stimulating an environment conducive to economic growth and prosperity. The growth prospects of the United States depend on the ability of the administration to make its way among the budgetary challenges.