As the media and economic experts deliberate President-elect Donald Trump's economic policies, the pivotal question remains, are his policies good for economic growth? On one hand Trump's bold fiscal stimulus should, in theory, be expansionary for the U.S. economy and bolster growth. On the other hand his protectionist trade policies, will reduce access to cheap imports and raise labor costs, which in turn will likely curb growth. (See also: How Trumponomics Might Boost the Stock Market.)

Economists are grappling with how to put Trump's fiscal and trade policies together. Bank of America Merrill Lynch (BAML), in its latest global weekly note said that Trump's trade and fiscal policies create uncertainty and "until that uncertainty is resolved, it tends to slow growth and weaken asset prices." 

Fiscal Policies and Tax Plan

Fiscally, Trump's promise to increase local infrastructure, strengthen the police and a “completely rebuild our depleted military" sound good in theory, but for someone who has been highly critical of the current administration over their handling of the debt, he hasn't addressed who is going to pay for it. 

Trump and congressional Republicans have said they are against further borrowing and growing the national debt, which is near $20 trillion ($14 trillion held by government entities). "When I say that, we owe, this is what you're talking about, we owe $19 trillion as a country. And we're gonna knock it down and we're gonna bring it down big league," Trump said at a convention in New Hampshire. Economists are asking, how can he pay for this stimulus without increasing the debt? The answer is, he can't. 

In fact, the Committee for a Responsible Federal Budget estimate his economic policies will grow the national debt to $36 trillion by 2026, which will equate to 129 percent of GDP. 

Funding Trump's fiscal stimulus gets even more tricky as his income, international and corporate tax cuts look to wipe out a large portion of government revenue. Analysts estimate Trump's corporate tax reform would cut government by anywhere between $4 trillion and $6 trillion (the CRFB estimate the proposed tax reform will cost $4.5tn and the Tax Foundation estimate anywhere from $4.4tn to $5.9tn). However, Trump argues he will "leverage public-private partnerships and private investments through tax incentives to spur $1 trillion in infrastructure investment over ten years."

Trade Policies

Economists generally agree that free trade creates better overall economic outcomes for countries. However, Trump's entire campaign was to reform U.S. trade policy and "make better deals." So far, Trump's talk has been challenged by China that recently said it will  adopt a tit-for-tat approach if the U.S. decides to impose the 45 percent tariff on imported goods. China's state run newspaper the Global Times said in an editorial piece that China would halt imports of American made Boeing Co. (BA) planes in favor of the French-made Airbus. (See also: China Threatens U.S. Imports Will Fall If Trump Imposes Tariffs.)

Unhappy former trade partners aren't Trump's only roadblock. If Trump's fiscal policy spurs fails to spur inflation and the dollar appreciates (as it has done in the week since the election) U.S. exports will be less competitive on the global market, and that will make it harder to reign in the U.S. trade deficit. 

The Bottom Line

As investors piece together the puzzle of Trump's fiscal and trade policies and how it will affect economic growth, U.S. investors are betting on his fiscal policy, leading to a record sell-off in the U.S. bond market as investors brace themselves for an onset of inflation. However, as the short-term uncertainty lingers, BAML has revised down U.S. growth for the first half of 2017 by 0.5 percent. (See also: With Trump, Bond Bubble Is Out, Inflation Is In.)