Backed by a Republican-controlled Senate – and possibly a Republican-led House of Representatives – newly-elected President Trump is poised to align domestic and foreign policy with his agenda. Below is our initial analysis of the impact that this election will have on the marketplace, businesses and across specific sectors.
As the incoming Trump Administration begins to take shape (recognizing that personnel is policy in Washington), we will continue to share our analysis. Additionally, we look forward to providing deep dive sector- and issue-specific commentary on request.
The Macro View
- The replacement of Biden Administration majorities at key regulatory agencies (the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and others) will likely:
- Re-open the IPO window.
- Reduce scrutiny on M&A activity (with exceptions in certain industries), including for private equity transactions & roll-ups.
- Tame overly assertive antitrust enforcement.
- Reduce permitting and environment impact restrictions for the construction of new energy infrastructure, housing, and other big-ticket projects.
- Create an environment for clearer crypto currency regulations.
- Tee up appointments across the federal judiciary, possibly including the Supreme Court (which, in turn, will further dial back what will be viewed as regulatory overreach).
- Set the stage for the redirection of federal spending in certain industries.
The following information is based on policy positions articulated by the Trump campaign over the last year-plus, and are best viewed only as indications of possible Trump Administration policy. We note that these points were made before the Congressional elections results were known.
Taxes
- Business
- Lower the corporate income tax rate from 21 percent to 20 percent.
- Lower the corporate income tax rate to 15 percent for companies that make their products in the U.S.
- Also, Vice Presidential candidate Sen. JD Vance (R-Ohio) has discussed increasing the child tax credit to $5,000.
- Individual
- Make the individual and estate tax cuts from the Trump 2017 Tax Cuts and Jobs Act (TCJA), which expires at the end of 2025, permanent.
- Reinstate an unlimited itemized deduction for State and Local Taxes (SALT) paid or discontinue the cap as part of the extension of the TCJA extension.
- Exempt Social Security benefits from taxation.
- Exempt tip income from taxation.
- Exempt overtime pay from taxation.
- Create a deduction for auto loan interest.
- Create a tax credit for family caregivers.
- Consider replacing personal income taxes with increased tariffs.
- Reduce housing expenses through regulatory and permitting reform.
Tariffs & Trade
- Impose a universal baseline tariff on all U.S. imports of 10 percent to 20 percent.
- Impose a 60 percent tariff on all U.S. imports from China.
- Threatened to impose tariffs on Mexico of between 25 percent and 100 percent until it closes its border with the U.S.
- Increase investigations by the U.S. Trade Representative (USTR) that could lead to the imposition of additional tariffs.
- Recognize there will likely be more of a focus on bi-lateral trade deals instead of multi-lateral agreements (especially in key sectors, i.e., agriculture, critical minerals, autos, steel, etc.).
- Possibly penalize U.S. trading partners who shift away from the dollar.
General Economy
- Favors lower interest rates.
- Has voiced support to give the President greater input into the process the Federal Reserve uses to set interest rate policy.
Energy
- Supports increased domestic fossil fuel drilling, production and export.
- Supports drilling on federal lands.
- Rescind unspent funding for the clean energy tax incentives created by the Inflation Reduction Act (IRA), including tax credits for electric vehicles and energy and electricity production.
- End Biden Administration mandate that half of all vehicles be electric by 2032.
- Likely use of Executive Orders to reverse many of the Biden Administration pro-environment, pro-climate actions.
Technology
- Expect that fewer acquisitions in the technology sector will be reviewed by regulators – except for those with a China component (which will get additional scrutiny).
- Anticipate that the current rulemaking on data privacy will not move forward.
- Roll back part, or all, of the Biden Administration’s October 2023 Executive Order on AI.
Healthcare
- The Affordable Care Act (ACA) could potentially be weakened via administrative actions while efforts to “repeal and replace” it will take a backseat.
- The Most Favored Nation Rule will likely be reinstated and Medicare drug pricing negotiation will be altered.
- Increase price transparency and promote choice.
Financial Services
- Regulatory agencies (SEC, CFTC, OCC, CFPB, and others) will lighten their touch and dial back rulemaking in certain areas.
- Issues around non-core financial metrics (DEI, ESG) will be de-emphasized and mandatory disclosure filings about these issues stepped back.
- There will also be a push for legislation to prohibit banks from denying specific sectors fair access to financial services.
- Imposition of a clear pro-crypto regulatory framework (likely with the CFTC as the lead agency).
Antitrust
- Appoint less onerous antitrust regulators at the DOJ and FTC – with the net effect of enabling smaller companies to find an exit via an acquisition by a larger same-industry company.
- Certain companies that could be viewed negatively by the Trump Administration can expect to receive scrutiny, however.
- Focus on private equity roll-ups will decrease.
- Likely that some current high-profile cases will be settled.
- Revisions will be made to the 2023 Merger Guidelines, specifically to the Biden Administration-era concepts of labor and employment concerns as signs of market power and “serial acquisitions.”
