Early this morning, the Associated Press declared Republican nominee Donald Trump the winner of the 2024 presidential election. Although nothing is certain, we can make a few predictions about how a second Trump presidency will impact Americans’ finances based on his campaign messaging.
Most of Trump’s promises will require the approval of Congress, where Republicans have regained control of the Senate. He has the potential to enact more major legislative changes than he did the first time around.
Here’s what we know about how Trump’s Electoral College victory might affect your wallet.
Inflation
Inflation is at the forefront of many voters’ minds, given that many Americans are still struggling to make ends meet over two years after post-pandemic inflation peaked at 9.1%. So it’s safe to expect Trump, a seasoned businessman, to try to promptly tackle the cost-of-living crisis.
However, inflation is actually near the Federal Reserve’s long-term preferred level of 2%, and economists say that Trump’s other policies could “reignite” those sky-high price increases, causing another cost-of-living crisis.
In a recent interview with Reuters, Trump said he would like to be able to encourage the Fed to raise or lower interest rates. Although he doesn’t think he should be allowed to actually order any changes to interest rates, taking such a vocal stance on the issue would be a break from tradition. Trump’s unconventional approach could create some awkwardness between the executive branch and the central bank.
Taxes
Taxes are another top priority for Trump. During his campaign, he promised to cut taxes on most Americans — but what he has proposed doesn’t match up with that promise.
His campaign based its tax plan on the Tax Cuts and Jobs Act, or TCJA, a sweeping 2017 tax law that went into effect while he was in office. Many TCJA provisions are scheduled to expire at the end of 2025, so Trump wants to make them permanent.
The TCJA did save many Americans money, but the impact wasn’t equal across the board. Households that earned between $308,000 and $733,000 experienced the most significant tax cuts. According to the Institute on Taxation and Economic Policy, if the revised TCJA goes into effect, it will result in tax increases for most households and only give significant tax breaks to the wealthiest 5% of Americans.
Along with making the favorable TCJA provisions permanent, Trump wants to eliminate taxes on Social Security benefits, overtime pay and tips.
Tariffs
Trump has repeatedly threatened to raise tariffs on imports. He wants to impose a 20% tariff on all imports with higher tariffs on Mexican and Chinese goods, which could go as high as 100%. (By comparison, the average U.S. tariff is 3%.
In theory, tariffs encourage domestic manufacturing. If importing goods becomes more expensive because of tariffs, it encourages businesses to invest in their United States warehouses and supply chains.
However, there are myriad consequences. Executives at companies like AutoZone have already confirmed they would implement price hikes to offset the cost of these tariffs. Trump pledged that the countries exporting goods to the United States would pay the increased costs, but that’s not how it works.
Tariffs are better considered as a hidden tax. Companies need to recover the additional costs, and they do so by raising prices on all their customers, not just their U.S. customers. These price hikes impact both American manufacturers and households.
Experts believe these and other factors will cause the average household to spend an additional $2,600 annually.
Health insurance
Trump is a longtime critic of the Affordable Care Act (ACA). He signed an executive order to repeal it in 2017 and proposed a replacement for the ACA in his 2020 budget proposal. Although the ACA was never repealed, his administration did weaken it. For example, the individual mandate penalty was nixed, Trump stopped paying cost-sharing subsidies and he allowed the sale of short-term plans.
House Speaker Mike Johnson, R-La., promised “massive” health care changes on the campaign trail, but Trump’s new stance on the ACA — if he really has one — is unclear. Repealing the ACA is not officially part of Trump’s policy position, although it’s also true that more transparency and choice within the health care field is.
Separate from his plans for the ACA, the GOP’s platform indicates Trump plans to decrease health care costs and strengthen Medicare. And during his campaign, he promised to do more for veterans.
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