We won’t be dealing with political issues in this article, only expectations that seem likely to be pursued following Jan. 20, 2025, when President-elect Donald Trump takes office. The purpose of this article is to help you in terms of your own financial planning, because some of these expected changes will likely affect you—and perhaps your business or employer.
Trump will announce his plans for government in due course, but here are the larger issues he talked about during his presidential election campaign. He wants to protect U.S. industry, boost the in-country businesses, and encourage Americans to buy American products.
Taxes
The corporate income tax was lowered from 21 percent to 15 percent, along with an extension of the 2017 tax changes Trump initiated in his first term. Some of the Biden-era tax hikes on wealthy Americans will likely be rolled back. As for the middle class? Exempting taxes on tips, overtime wages, and Social Security for seniors are all going to be put forth in early 2025. Climate action-related energy measures in President Joe Biden’s Inflation Reduction Act are likely to be scrapped.Trade and Tariffs
Emphasis will shift from global markets to domestic economic interests. Tariffs of 10–20 percent on foreign imports can be expected, and, in some specific cases such as China’s electric vehicles (EVs), those tariffs may be even higher. Trump also favors a policy that creates incentives via the Food and Drug Administration for “essential” medications to be sourced solely from U.S. companies. Foreign investment in America will be prevented in cases where they affect our strategic interests that are presumed “vital” to American economic strength and vibrancy.Secretary of Cost Cutting: Elon Musk
A meat cleaver rather than a scalpel will likely be the tool of choice when it comes to federal bureaucracies. A proposal to shutter the Department of Education, along with streamlining, combining, or significantly reducing other federal departments, may be disruptive, but stands to reduce federal spending substantially. Musk’s cuts at Twitter/X and his layoffs at Tesla demonstrate his mettle when it comes to making these hard decisions to cut costs.Expect a lot of regulations (red tape?) to succumb to the axe of cost-cutting and reform in the interest of improving efficiency and accessibility. More federal land will be opened for fossil fuel production, with these efforts aimed at reducing energy utility bills. Trump wants to cut regulations related to housing construction and neuter the power of environmental challenges that can delay or even kill development.
Streamlining, Centralizing Decision-Making
The Federal Reserve, an independent entity, may become subject to more presidential power, influence, and control. The mechanics and machinations of the monetary and fiscal policies would consolidate in terms of control and influence, so we would no longer have fiscal spending at cross-purposes with monetary policy.Trump has proposed that the federal government should take over the college accreditation processes—a sea change affecting higher education. In addition, the higher education endowments would be subject to assessments as many colleges and universities have large sums. Harvard University, for example, has the largest endowment of any university in the world, with $53.1 billion in assets as of the end of 2023. Harvard’s endowment is made up of more than 14,000 funds that have been combined over the past 350 years.
Entitlements: Social Security, Medicare, Medicaid
Protection of Social Security and Medicare has been promised, as these popular programs benefiting older Americans make up a big piece of the federal spending pie. Exempting those wages from payroll taxes would have the effect of reducing the funding stream for Social Security and Medicare outlays, so other alternative ways and means to backfill may be needed.Health Care
Trump would like to repeal the Affordable Care Act and its related subsidized health insurance marketplaces, but this new plan still requires more meat on the bones and a detailed plan. He will likely look to Robert F. Kennedy Jr. to preside over the development of such a plan. Trump has said that he would put Kennedy in charge of “making America healthy again.”Other Potential Changes to Come
We can expect the formation of unions to become a bit more difficult for workers, a reflection of Trump’s perception that, in some cases, corporate CEOs and unions collaborate to bring about certain results such as electric vehicles. Trump would prefer to scrap EV subsidies and the climate-related government edicts that have evolved.Trump will be focused more on domestic issues, and that may mean less involvement in foreign wars and global organizations. These moves could have the effect of saving money or at least redirecting it toward domestic needs. Many political “hot potatoes” will get touched, issues such as immigration for example, and we don’t know how all that will play out, but the challenges will be taken on by an administration that may end up with the support of Congress.
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