Trump 2.0

Answer: With Trump now officially the 47th President of the United States, we do know that he has specific action items as priorities for his second term. No matter how you feel about Trump, his presidency will impact the economy. At the top of the list are tax changes, tariffs, and illegal immigration. This time around, Republicans control both the House and the Senate. Also, his strong transition team is ready to get to work.  

Agenda items that can be achieved through executive action include tariffs and illegal immigration, while those requiring Congressional authorization are taxes and the debt limit. Trump will likely start with the executive-driven actions to avoid multi-year negotiations that delayed his first term agenda.  

Tariffs: Trump’s nominations for Treasury, Commerce and US Trade Representative are clues about how serious he is about aggressive trade and tariff actions. Tariff talks are a key ingredient in Trump’s strategy to get countries attention. After getting their attention, he’ll invite them to the negotiationtable. Trump vowed to impose tariffs on China, Mexico, and Canada on day one in response to fentanyl and illegal immigration concerns. 

Trump went on to highlight that these countries can avoid excessive tariffs by negotiating and making deals. The tactic is designed to about trade deals with significant benefits to US companies and US exports. Manufacturing jobs can come back to the US, especially in states like Michigan and Pennsylvania. Domestic manufacturing growth could help the country and the economy.  

Personnel: Key appointments will surely influence policy and regulatory specifics and their implementation.Trump announced cabinet picks,yet the ultimate fate lies with Senate approval. Some of the more controversial picks will face uphill battles leading to some uncertainty in this area. Trump’s nominees support his stance on ending the war between Russia and Ukraine, and the wars in the Middle East, bringing unmeasurable benefits.  

Debt Limit: After personal confirmations, the debt limit will be a top priority. days. Expectthe debt ceiling to eventually be raised. There will be political drama during the process adding to possible volatility in the short-term. It’s likely that desires to speed up infrastructure and energy-related projects will be added to discussions to increase the debt limit. The result would be adding to economic growth and a plus for industrial projects, both high tech and low tech with artificial intelligence (AI) and infrastructure possibly benefitting.  

DOGE and the Budget: We discussed DOGE (Department of Government Efficiency) in the December 19th column. Elon Musk and Vivek Ramaswamy will lead DOGE. Expect DOGE to push for deregulation in bloated areas and to reduce government spending. The slim House Republican majority indicates that there will be challenges in this effort.  

Ironically, increased spending is required in the short term to increase long-term efficiencies. For instance, many government systems and technologies are outdated. DOGE leaders have technology backgrounds. Expect to see upgrades to improve efficiency and cybersecurity, potentially positioning the US government for greater competitiveness and competency worldwide.  

Tax Cuts: The 2021 Tax Cuts and Jobs Act (TCJA) is set to expire December 31, 2025. The base case is for an extension of TCJAto include provisions for no tax on tips, overtime, and Social Security which Trump introduced during the campaign. The expiration of the current estate tax limit is likely to be extended as part of larger package.  

We’ll be watching closely; these changes could have significant market impact. New tariff authority, repeal of the Inflation Reduction Act, entitlement reform, cuts suggested by DOGE, and other provisions are all on the list of potential offsets. Fewer bureaucratic roadblocks and less regulation would lead to increased efficiency resulting in growth. The potential beneficiaries are manufacturing, industrials, technology, automation, and desperately needed electrical infrastructure improvements. The timing, magnitude and cadence of these policies are uncertain at this time.  

So, what’s a gal to do? With increased uncertainty, the importance of asset allocation and maintaining a diversified portfolio cannot be overstated. Having a clear strategy, adhering to a long-erm approach, and building a balanced and resilient portfolio may help grow wealth and ride out any volatility that comes our way. Stay focused and plan accordingly.  

https://www.raymondjames.com/commentary-and-insights/retirement-longevity/2024/10/23/the-ins-and-outs-of-nonqualified-deferred-compensation