2024’s election cycle was one of the most intense ones we’ve had in modern history.
Ultimately, Donald Trump won a second term, and Americans are bracing for what’s next.
From high tariffs to a golden age for crypto, Trump has promised to bring new changes that could transform the US economy.
This article will discuss five main changes to expect from a second Trump term and how it could affect your wallet!
1. Inflation
If there was one thing on everyone’s minds this election, it was inflation. Even two years after the historic 9.1% post-pandemic high, most Americans still feel pessimistic about the economy. In many ways, this gave Trump the edge to win them over.
So, how does he plan on tackling inflation and the cost of living? His Agenda 47 mainly focuses on:
- Cutting out bureaucracy and red tape for businesses
- Increasing tariffs on all foreign countries, especially China
- Expanding our energy sector
- Slashing government spending
- Reducing illegal immigration
- Larger tax cuts
These policies could lower prices for struggling American households over time —or at least that’s what the President-elect believes will happen.
However, not everyone is convinced. In a recent WSJ survey, 51% of economists claimed Trump’s policies will worsen inflation. Critics argue that increasing tariffs will raise prices as companies pass down costs to consumers. To top it off, aggressive tax cuts could lead to a higher deficit and increase prices even further.
2. Taxes
With his Tax Cuts and Jobs Act (TCJA) of 2017, Trump’s initial tax cuts were the eighth-largest in American history.
And as most of these tax benefits expire early next year, the president-elect plans to extend them and make them permanent.
On the surface, most of these cuts did help Americans lower their tax burden. But if you look deeper, the benefits weren’t as wide-reaching as you think. They dramatically benefited those on the upper end of the income scale while raising taxes for lower-income groups.
He’s also planning on eliminating taxes on Social Security benefits, tips, and overtime pay. Several Republican leaders have discussed adding these policies to their budget reconciliation bill within Trump’s first 100 days in office.
3. Student Loans
As President Biden’s student loan forgiveness program is still pending, 8 million student borrowers in the SAVE program are still in limbo. So far, students haven’t had to make payments as the courts decide whether to approve the program.
The best-case scenario is that the courts will approve it shortly before the Trump administration phases it out.
But it’s highly doubtful any other loan forgiveness program would pass under the new president.
The only program we could expect to return is the old Income-Based Repayment Plan (IBR),
which offers some financial relief. However, even with this plan, most students could expect to pay more.
4. Tariffs
One of Trump’s policies involved taking tariffs to the next level. He’s proposed raising tariffs to 10-20% on every country, up to 60% on Chinese-made products, and 100% on anything made in Mexico.
The main goal is to convince companies to start producing products back home. Deindustrialization in Rust Belt states affected a massive base of Trump supporters, so higher tariffs might promote the manufacturing industry and give communities in these areas more job opportunities.
Higher tariffs could also help offset the budget deficit from tax cuts and other policies.
But like many of his other plans, this one also has drawbacks. A recent study shows that if Trump’s tariffs go through, middle and lower-class Americans would need to pay $2,600 more for essentials each year. This could offset income gains from tax cuts and potentially slow the economy.
5. Cryptocurrency
The crypto world has been having a field day since Trump’s win. Bitcoin has skyrocketed to record levels, while alt-coins like Dogecoin also see massive gains.
The president-elect has even gone as far as to accept donations in Bitcoin and wants the US to become “the crypto capital of the planet.”
Ideally, this could mean that the government could establish a legal framework that makes it easier for all investors to participate in the crypto market.
The Bottom Line
No matter where you stand on the political aisle, one thing’s sure — Trump’s second president will bring major changes to the economy.
Time will only tell whether these reforms will hurt average Americans or give the US the change it needs to grow.
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