4 Economic Shakeups That Could Happen on Day 1 of Trump’s Presidency
Written by
Kerra Bolton
Edited by
Cory Dudak
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The U.S. economy is poised to experience immediate shifts as President-elect Trump prepares for his second term, beginning in January.
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From tax policy overhauls to regulatory rollbacks and renewed trade tensions, these changes could redefine how America does business and families budget and save.
Here are the four economic shakeups that could happen on Day 1 of Trump’s second term.
America First
Coined by President Woodrow Wilson, “America First” is a series of economic and diplomatic policies that focus on domestic issues and a protectionist trade policy. More than a century later, for the second Trump administration, “America First” policies could reimpose trade tariffs and reduce trade agreements.
“Immediate impacts could include disruptions to global supply chains, higher costs for imports, and potential retaliatory tariffs,” said Christopher Stroup, founder and president of Silicon Beach Financial. “In totality, these efforts could negatively affect U.S. exports and international trade relations.”
Economists like Wayne Winegarden at the Pacific Research Institute have expressed concerns about the impact of President-elect Trump’s global international trade policies.
“Global supply chains will be disrupted, causing the costs of many goods that Americans consume on a regular basis to increase,” Winegarden said. “Ironically, given his intentions, by disrupting the global supply chains, total U.S. exports will likely decrease, as well.”
Tax Cuts
Trump’s 2017 tax cuts could expire at the end of the year unless the Republican-controlled Congress acts to extend or make them permanent.
The President-elect said throughout the election campaign that he would prioritize tax cuts for individuals, small businesses and corporations, including exempting tips and Social Security checks from federal taxes.
“Short-term effects might include increased disposable income for individuals, enhanced cash flow for small businesses, and potentially higher corporate profits. The goal with these efforts would be to boost economic activity. The downside of these tax policies is that they would greatly increase budget deficits.”
On Day 1, Winegarden said the new Administration should prioritize locking in the 2017 tax changes and creating greater tax certainty.
“This includes dropping the push to remove the cap on the state and local tax (SALT) deduction and jettisoning tax giveaways that do not improve the incentives to work and invest (e.g., exempting tips from taxation,” Winegarden said.
Lower Energy Costs
Contrary to public perception, the U.S. has experienced record oil production during the past three years. According to data from the U.S. Energy Information Administration, the nation “produces more crude oil than any country, ever.”
“The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term because no other country has reached production capacity of 13 million barrels per day,” the federal agency said in a report.
Nevertheless, Trump has courted the fossil fuels industry since his first term when he said, “Drill, baby drill.”
“Immediate shifts in energy policy could involve expanding fossil fuel production and scaling back renewable incentives,” Stroup said. “This might boost short-term profits for oil and gas companies, but could reduce investment in green technologies. In the end, it is expected that the administration’s energy policies would slow progress on environmental regulations and climate goals.”
For example, Winegarden said an important priority for the second Trump administration will be repealing the Biden Administration’s temporary pause on liquified natural gas (LNG) export terminals.
“Exports of natural gas will not increase domestic prices as the current (Biden) Administration alleges,” Winegarden said. “Greater exports will increase U.S. economic growth, support the economies of Europe, and reduce overall greenhouse gas emissions — the quintessential win-win-win.”
Student Loan Repayments
The 8 million student loan borrowers who enrolled in President Biden’s Saving on a Valuable Education (SAVE) are in limbo as the U.S. Supreme Court rejected Biden’s plan, saying that forgiving about $455 billion in student loans exceeded his authority.
In the meantime, borrowers have been asked not to make payments while the courts decide the legality of SAVE. In an interview with Elon Musk on X, Trump floated the idea of eliminating the U.S. Department of Education, which, among several things, oversees federal student loans and repayments.
“Larger student loan debt and other financial obligations divert sources away from retirement savings for younger generations,” Stroup said. “Many are forced to prioritize paying off loans or covering everyday expenses, which can delay or reduce contributions to retirement accounts.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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