Stock markets have been soaring since Donald Trump’s triumphant electoral victory last week. Evidently, investors feel more optimistic about Trump’s economic agenda of cutting income taxes and regulations than they did about Kamala Harris’s “opportunity economy”—which essentially amounted to spending more taxpayer money on favored constituencies.

Unfortunately, this current optimism is mainly speculative and appears to be ignoring important realities. By all indicators, the new administration is inheriting a weak economy teetering on the precipice of a full-scale collapse.

According to the Brownstone Institute, the economy has technically been in a recession since 2022, as we have experienced negative growth for several quarters. For political reasons, this has been covered up and mitigated by data manipulation and massive deficit spending from the federal government. This spending, in turn, has resulted in even more debt, runaway inflation, and increased corporate dependence on government largess.

Our robust labor market is also a mirage. The supposed job growth that happened under the Biden administration consisted mainly of rehiring for jobs that were lost during the COVID shutdowns, jobs created by the government, or part-time jobs. Moreover, most of the beneficiaries of new employment were non-American residents. It didn’t help that the Bureau of Labor Statistics falsely predicted significant job growth in their jobs reports from this summer and last month.

Added to this are the tens of millions of illegal immigrants putting downward pressure on wages by increasing labor supply and upward pressure on the general cost of living by increasing consumer demand. Moreover, the budgets of local and state governments are being bled dry by these self-imposed new residents.

Overall, it will take much more than a few cuts in taxes and regulations to save this sinking ship. To save the American economy, the incoming Trump administration will have to do three very difficult things: cut federal spending, raise revenue through tariffs, and deport the majority of illegal immigrants who have recently entered the country.

Without going into the weeds concerning policies protecting government employees, a budget cut mainly comes down to an administration willing to propose and enforce the cuts, a legislature willing to make the cuts, and courts willing to uphold all of this cutting. Although many conservatives and libertarians fantasize about Elon Musk firing 80 percent of the federal workforce as he did with Twitter or Trump sitting at his desk telling all of them “You’re fired” as he did on The Apprentice, the reality will be far less entertaining. Trump can propose a reduced federal budget but Republicans in the House and Senate will have to vote on it—for reference, the last time there was a budget surplus was in the 1990s with the legendary Newt Gingrich as House Speaker.

Because donors and lobbyists want politicians who will continually approve more spending, those who bear the brunt will have to exert a countervailing influence if they expect our legislators to approve spending cuts. Voters need to see this as the price of a strong economy, not the painful loss of this or that special subsidy, program, or project. Besides, it’s their money being taxed and inflated, not the government’s.

Even assuming this might happen, the Trump administration would then have to raise revenue to meet expenses as well as pay down the debt—a debt for which interest payments now make up the second highest category of spending each year. Some of this could happen by expanding the tax base, but some revenue will have to come from somewhere else if Trump wants to keep taxes low. This is where tariffs come in.

In conversation with Joe Rogan, Trump declared, “the most beautiful word in the English language is tariff. It’s more beautiful than the word love.” For Trump, this makes sense: taxing imports would raise government revenue and incentivize businesses to remain in or return to America which would result in more jobs and growth in the economy. Free trade advocates and globalists might claim that tariffs would raise the price of goods, but as policy scholar Michael Lind sardonically notes in his book Hell to Pay, this benefit is exaggerated: “American consumers paid around 6 percent less for imports from China than they might have paid for American-made products. What a bargain!”

On a political level, implementing tariffs would be a huge success with middle- and working-class Americans but deeply unpopular with those who control multinational corporations, are addicted to cheap labor, and primarily serve their shareholders rather than their employees or customers. The alternative to this would be raising taxes on everyone and everything, as Kamala Harris was planning to do even though she framed it as the “rich paying their fair share.”

Finally, Trump needs to secure the border and deport the millions of people who came here illegally during the Biden administration’s negligence. It won’t be enough to target only the “bad hombres” involved in criminal activity because for things to improve, we will need to remove those who are net drag on the private and public economies. In this regard, Trump should start with the most recent entries and work backward until he reaches a manageable number.

It is likely that enacting deportation on this scale will be Trump’s biggest challenge. Many news outlets are primed to demonize such efforts when they include breaking up families and sending these otherwise innocent people out of the country. Nevertheless, the polls  at this point seem to indicate that most Americans understand it is necessary to deport illegals. We have reason to hope they will see past the many sob stories and think about securing the country’s future instead.

As things stand, the country takes in millions of legal immigrants every year—far more than any other developed country. Anyone who sympathizes with immigrants can take comfort in this fact and devote their efforts to reforming the immigration process. Aside from human smugglers, sex traffickers, and exploitative employers, in the end unchecked illegal immigration benefits no one and hurts legal immigrants and Americans alike.

It remains to be seen how far Trump can go with these measures. In the near term, Americans can expect Democrats, government bureaucrats, corporate cronies, globalist NGOs, and illegal immigration advocates to wail in horror—which Elon Musk ominously regards as “temporary hardship.” But if we hold fast and understand this as the cost of reversing serious economic decline, we will witness amazing prosperity.