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.”
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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.”
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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.