Local economists weigh in on federal policies

Yahoo

06-03-2025

SIOUX FALLS, S.D. (KELO) – President Donald Trump addressed a joint session of Congress Tuesday night for the first time since returning to office six weeks ago. And in his address, the economy was a big focus.
Trump made promises such as lowering the price of eggs and passing tax cuts for everybody.
'Among my very highest priorities is to rescue our economy and get dramatic and immediate relief to working families,' President Trump said during his Address to Congress.
He also discussed policy changes regarding federal government spending and labor force, which is something Reynold Nesiba, a professor of economics at Augustana University, has been focusing in on with this Administration.
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'When you have a federal government that's just laying off people on a whim in the way that DOGE is going about that, that's just creating great uncertainty for the federal labor force and it's going to haunt the federal government for a long time to come in terms of being able to recruit and retain people,' Nesiba said.
Evert Van der Sluis, an economics professor at SDSU, says that it might be a good thing to increase government efficiency if the goal is to create a higher return for tax payers.
'On the other hand, the specific goal has not really been stated other than to say, 'well, we want to reduce the size of the federal government,'' Van der Sluis said. 'But if you look at the historical numbers, it turns out that the size of the federal government, in terms of the number of people working there, has been fairly flat for the last 50 years or so.'
Trump also discussed tariffs, defending the ones imposed against imports from Canada, Mexico and China.
'Tariffs are about making America rich again and making America great again,' Trump said during the Address.
Nesiba says imposing 25% tariffs on Mexica and Canada, as well as another 10% to imports from China, will have an inflationary reaction.
'We will be paying more for automobiles, for food, for clothing from those three trading partners,' Nesiba said.
Van der Sluis says a tariff is simply a tax on imports.
'And there's been kind of some confusion as to who pays for those tariffs. And it's largely the case that the buyer pays,' Van der Sluis said. 'So that means importers — that could be businesses but then that higher tax, these higher costs that get paid get passed down to those who buy the product of whatever that import is going to be used for.'
Both Van der Sluis and Nesiba say, right now, there's a lot of uncertainty in the economy.
'So, for quite some time, I think since before the elections, the economy is doing quite well but as we create more uncertainty then businesses might hold off on new hiring because they want to see what's around the corner before they take any big risks,' Van der Sluis said.
'I think one would have to have a lot of faith to decide, you know, I think now is really a great time to open up a new factory or open up a new storefront,' Nesiba said. 'It's that uncertainty that I think is going to be the biggest factor that has the biggest potential to adversely affect overall economic growth.'
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