[UNITED STATES] Now that Donald Trump has been certified the victor of the 2024 election, American consumers are eager to learn what a Trump 2.0 president would mean for their money.
From financial portfolios to childcare bills, there may be significant adjustments. Trump's entire agenda includes a pledge to impose taxes on practically all US imports, which is expected to drive inflation higher.
As the news of Trump's victory reverberates across the nation, economists and financial analysts are scrambling to predict the long-term implications of his policies. Many experts point to his previous term as a blueprint for what's to come, while others caution that the global economic landscape has shifted significantly since 2020. The uncertainty surrounding these predictions has already led to increased market volatility, with investors closely watching for signals of Trump's first moves upon retaking office.
The following are five categories — investments, overall expenses, housing, taxes, and childcare — in which US consumers may anticipate to be affected by a future Trump administration.
Investments
Trump's promise to lower the corporate tax rate is widely regarded as positive for earnings, particularly in the consumer discretionary, communication-services, and financial sectors. However, his idea to tax all US imports is considered as a drag on consumer spending and potential inflation.
If such inflation fears come true, interest rates will rise, pushing bond values lower. Trump is also perceived as favorable on cryptocurrency, and his protectionist policies are expected to push the dollar higher.
Following Trump's triumph, the so-called Trump trade took off, with equities, Treasury rates, the dollar, and bitcoin all rising dramatically.
The energy sector is another area of particular interest following Trump's victory. His campaign promises to revitalize the fossil fuel industry and roll back environmental regulations have sent ripples through the market. Oil and gas stocks have seen significant gains, while renewable energy companies have experienced a downturn. This shift highlights the potential for dramatic changes in the energy landscape under a second Trump administration, with far-reaching implications for both investors and consumers.
Costs
Trump's intention to slap a broad-based 10%-to-20% tax on most items imported from other nations — and up to 60% on Chinese imports — is largely perceived as raising the cost of import-dependent products. Automobiles, medications for human and veterinary use, food and beverage, furniture, and home appliances are among the most vulnerable to tariffs.
In a same vein, the former president has previously stated that he intends to reduce grocery prices by banning food imports in order to support domestic manufacturers.
The potential impact on the tech industry is also a major concern for consumers. With Trump's tough stance on China and proposed tariffs, the cost of electronics and gadgets could see a significant increase. Industry insiders warn that everything from smartphones to laptops could become more expensive, potentially slowing down technological adoption and innovation in the US. This could have a ripple effect on various sectors that rely heavily on technology, from education to healthcare.
Housing
On the campaign trail, Trump stated that deporting millions of immigrants would help to alleviate the country's persistent housing deficit. The newly elected president has also stated that he plans to reduce demand by prohibiting mortgages for illegal aliens living in the United States.
During his previous White House tenure, Trump opposed the development of high-density housing in single-family-zoned regions, but he has not stated if he intends to pursue such measures again this election cycle.
Furthermore, if Trump's administration causes inflation and interest rate rises, it will have an impact on house affordability in the form of increased mortgage rates, which mirror the Fed's benchmark.
The real estate market is bracing for potential upheaval as Trump's policies take shape. While some experts predict a boom in certain areas due to deregulation and tax incentives for developers, others warn of a potential housing crisis if immigration policies lead to labor shortages in the construction industry. The uncertainty has led to a surge in home buying activity, as some Americans rush to secure properties before any major policy changes are implemented.
Trump has suggested decreasing corporate tax rates from 21% to 15% for enterprises manufacturing in the US.
The former president has also stated that he intends to prolong his spate of tax cuts from the Tax Cuts and Jobs Act of 2017, popularly known as the "Trump tax cut."
A permanent extension of the TCJA's income-tax provisions would result in a nearly $280,000 tax decrease for the top 0.1% of incomes, compared to $1,000 for middle-income Americans, according to a Tax Policy Center estimate. Trump's idea for universal tariffs is regarded as countering a beneficial tax impact, and it would be particularly costly for lower-income Americans.
Childcare
Trump has suggested expanding the child tax credit, which presently amounts to $2,000 per kid. In August, vice presidential candidate JD Vance proposed a child tax credit of $5,000 per kid for households of all income levels.
In addition, while in office, Trump signed a bipartisan measure that guaranteed federal employees 12 weeks of paid parental leave, but he did not promote the topic during the 2024 campaign.
As the dust settles on the election, many Americans are left wondering about the practical, day-to-day implications of Trump's policies. Financial advisors report a surge in inquiries from clients seeking to adjust their long-term financial plans. From retirement savings strategies to college fund investments, consumers are reassessing their financial futures in light of the anticipated economic shifts. This wave of financial introspection could lead to significant changes in consumer behavior and investment patterns in the coming months and years.
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