The Trump effect 2.0: How his proposed policies aim to reshape the U.S.

By Yogesh Prasad, CFA, CAIA

Donald Trump’s second-term agenda promises significant changes, echoing many themes from his first term but with a more aggressive approach. Whether you agree or disagree with his stance, his policies on trade, immigration, and other key issues will undeniably have far-reaching effects. Let’s explore what these policies entail and what they could mean for the country.

1. Immigration overhaul: Border control, deportations, and legal changes

One of the cornerstones of Trump’s policy vision has been a stricter stance on immigration. If elected for a second term, he plans to further tighten border control and significantly alter existing immigration laws.

Mass Deportations: Trump has signaled his intent to carry out the largest deportation effort in U.S. history. This plan could involve the use of federal troops or the National Guard to locate and deport millions of undocumented immigrants. While supporters argue it would improve national security, critics warn of potential legal and humanitarian issues.

Revoking Birthright Citizenship: Trump has promised to end the practice of granting automatic citizenship to children born in the U.S. to non-citizen parents. This would involve challenging the 14th Amendment’s interpretation, likely leading to complex legal battles. Proponents believe it would curb illegal immigration, but opponents view it as unconstitutional

Reintroducing the Travel Ban: Trump intends to reinstate his travel ban, focusing primarily on Muslim-majority countries. He argues this policy is necessary for national security, despite significant backlash during his first term. Legal challenges and accusations of religious discrimination are expected if this policy is revived.

2. Aggressive trade policies: Tariffs and targeted actions

Trade has been a central focus of Trump’s economic agenda, with a heavy emphasis on reducing the U.S. trade deficit and promoting American manufacturing.

Nationwide 10% Tariff on Imports: Trump proposes a blanket 10% tariff on all imported goods. This move aims to protect U.S. industries and reduce reliance on foreign products. While it may boost domestic production in the short term, experts warn that such a policy could lead to higher consumer prices and strained trade relations.

Targeting China and Trade Wars: Trump’s rhetoric against China has intensified, as he plans to phase out dependence on Chinese imports in key sectors like technology and pharmaceuticals. His approach includes imposing stricter tariffs on Chinese goods and penalizing American companies that outsource to China. However, escalating trade tensions may harm global economic stability.

Strained Relations with Allies: Trump’s tariff policies may not be limited to adversarial countries. He has indicated potential tariff hikes on goods from traditional allies like the European Union, Japan, and South Korea if they impose barriers on U.S. exports. This stance underscores his commitment to a protectionist trade agenda.

3. Tax reforms: Cuts for corporations and workers

Trump aims to make significant changes to the tax system, focusing on reducing the burden for businesses and working Americans.

Corporate Tax Rate Reduction: Trump plans to cut the corporate tax rate from its current 21% to 15%, specifically for companies that manufacture in the U.S. He argues this will incentivize domestic production and create jobs. Critics, however, point out that such cuts may increase the national deficit without guaranteeing job growth.

Eliminating Taxes on Tips and Overtime: One of Trump’s new proposals involves removing taxes on tips and overtime pay. This measure is designed to provide immediate financial relief to service industry workers, potentially boosting their disposable income. Opponents argue it could lead to a decrease in tax revenues needed for federal programs.

4. Energy policy: A return to fossil fuels

Trump’s energy policies prioritize domestic fossil fuel production over renewable energy sources. He believes that deregulating the energy sector is crucial for economic growth and energy independence.

Expanding Oil Drilling: Trump supports reopening federal lands for oil drilling, including areas in the Arctic and offshore locations. His plan includes streamlining the permitting process to accelerate production. While this may benefit the oil industry and reduce reliance on foreign energy, environmentalists fear it could lead to ecological damage.

Withdrawal from Climate Agreements: Trump intends to withdraw from international climate accords, such as the Paris Agreement, which he views as detrimental to U.S. economic interests. He argues that these agreements place unfair restrictions on American businesses, despite widespread support for climate action.

Opposition to Electric Vehicle Mandates: Trump has criticized federal mandates on electric vehicles (EVs), advocating for a rollback of emissions standards and EV incentives. He believes these regulations are burdensome for traditional automakers and limit consumer choice. However, this policy stance could hinder the progress of the U.S. auto industry towards greener technologies.

5. Foreign policy and national defense: Shifting alliances and assertive actions

Trump’s foreign policy agenda continues to emphasize “America First,” with a focus on renegotiating alliances and taking a more unilateral approach in international conflicts.

Potential Peace Deal in Ukraine: Trump has made bold claims that he could end the war in Ukraine within 24 hours of taking office, though he has provided little detail on how he would accomplish this. Critics remain skeptical, noting the complexity of the conflict and Trump’s past favorable comments about Russian President Vladimir Putin.

Reevaluating NATO Commitments: Trump has repeatedly questioned the value of NATO, suggesting that the U.S. might reduce its financial and military support unless other member countries increase their contributions. This could weaken the alliance, raising concerns about global security, especially in Eastern Europe.

Military Action Against Cartels in Mexico: Trump has floated the idea of using U.S. military forces to combat drug cartels in Mexico, citing the threat posed by illegal drugs entering the U.S. Such a move would be unprecedented and could strain relations with Mexico, potentially violating international law.

6. Regulatory overhaul and federal investigations

Trump has vowed to overhaul federal regulations and take direct action against what he calls the “deep state” within federal agencies.

Purging Federal Bureaucracy: Trump plans to implement widespread firings within federal agencies, targeting those he believes have acted against his agenda. He aims to reduce what he perceives as political bias and bureaucratic interference.

Investigating Political Adversaries: Trump has pledged to use his authority to launch investigations against political foes, including members of the Biden administration. This tactic is seen as an attempt to hold his opponents accountable, though it raises concerns about potential abuses of power.

Conclusion

Donald Trump’s policy proposals for a potential second term reflect a mix of continuity from his first term and a more aggressive push towards his key objectives. Whether it’s trade protectionism, stricter immigration laws, or a rollback of climate initiatives, his agenda promises sweeping changes that would reshape the landscape of U.S. domestic and foreign policy. While his supporters see these moves as necessary corrections, opponents worry about the long-term consequences.

In Summary: Trump’s platform is polarizing but undeniably impactful, with significant implications for American workers, businesses, and international relations. As the campaign progresses, these policies will be central to discussions about the future direction of the country.