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Trump’s Second Term: How Proposed Policies Could Impact Your Financial Future

The 2024 election has ignited widespread debate about its potential impact on individuals and the broader economy. Donald Trump’s second term as President marks the beginning of a new chapter poised to reshape the financial landscape in significant ways.

If you’re feeling uncertain about what lies ahead for your financial future, now is the time to explore how Trump’s proposed policies could influence key areas like taxes, investments, and your overall financial plan. In this article, we’ll break down the anticipated policy changes in his second term and what they could mean for your personal finances.

#1: Extending TCJA Tax Cuts in Trump’s Second Term

A key focus of Trump’s economic agenda in his second term is extending the Tax Cuts and Jobs Act (TCJA), a landmark measure he signed into law in 2017. The TCJA reduced tax rates for approximately 80% of Americans, simplified tax filing for millions, and incentivized business investment. With many provisions set to expire in 2025, Trump’s push to extend and potentially expand these tax cuts could significantly impact taxpayers across income levels.

If extended, the higher standard deduction would remain, simplifying the tax process and allowing individuals and families to reduce taxable income without itemizing deductions. For higher-income earners, the top income tax rate would stay capped at 37%, preserving the current rate structure.

There’s also momentum building around the possibility of lifting the $10,000 cap on state and local tax (SALT) deductions. If approved, residents of high-tax states like California, New York, and New Jersey could see meaningful federal tax savings.

Additionally, the federal estate tax exemption—set to allow up to $13.99 million in tax-free transfers per individual starting in 2025—could continue under an extension, providing high-net-worth families with a powerful wealth transfer tool.

Other proposed measures for Trump’s second term include eliminating taxes on tips, overtime, and Social Security benefits, signaling a broader effort to deliver tax relief. While these changes require Congressional approval, they reflect an overarching strategy that could reshape tax planning for millions of workers, retirees, and families.

#2: Imposing Tariffs on Key Trading Partners

During his previous term, Donald Trump’s administration prioritized protectionist trade policies, particularly targeting China. With his return to office, he has signaled a renewed focus on these measures, which could have wide-ranging economic effects in his second term as President.

Tariffs—taxes on imported goods—are often designed to protect domestic industries from foreign competition and encourage consumers to buy locally made products. However, when applied to key trading partners like Mexico, Canada, and China, they can create ripple effects throughout the economy.

For instance, reintroducing tariffs could lead to higher costs for imported goods, driving up everyday expenses for consumers and potentially complicating certain investment strategies. Meanwhile, industries reliant on foreign manufacturing, such as technology, may face supply chain disruptions and increased production costs.

On the other hand, protectionist trade policies could present growth opportunities for certain U.S.-based industries. One example is manufacturing, which might benefit from reduced foreign competition and increased domestic demand.

#3: Industry-Specific Impacts: Energy, Technology, and Healthcare Implications in Trump’s Second Term

Donald Trump’s proposed policies are likely to impact certain industries more significantly than others. Here’s a closer look at what we might expect in the Energy, Technology, and Healthcare sectors under a Trump’s second term as President.

Energy Sector

Trump’s administration has long championed deregulation in the energy sector, a stance that’s expected to persist in his second term. Rolling back restrictions on oil, gas, and coal production could bolster traditional fossil fuel industries, potentially driving higher stock valuations and creating new employment opportunities within these sectors.

Trump has also proposed redirecting unspent funds from the Inflation Reduction Act to curb federal spending on green initiatives. While parts of the Act may still receive Congressional backing, this pivot could scale back subsidies, slowing the progress of renewable energy projects. Such a shift might reshape the energy landscape, presenting both challenges for the growth of clean energy and opportunities for traditional energy markets to regain prominence.

Technology Sector

The technology sector is poised for a mixed impact under Trump’s administration. On one hand, a continued focus on deregulation could ease compliance burdens for tech companies, streamlining operations and potentially reducing costs. On the other hand, his trade policies, particularly those targeting China, could pose significant challenges for firms reliant on global supply chains.

If higher tariffs are reintroduced, production costs for technology companies dependent on overseas parts and manufacturing could climb, potentially squeezing profit margins. As a result, stock performance in the sector may experience volatility as companies adapt to rising costs and navigate the complexities of shifting trade restrictions. Understanding these dynamics will be key for investors monitoring the tech industry.

Healthcare Sector

Healthcare policy is expected to remain a central focus during Trump’s second term, with an emphasis on reducing costs and fostering competition. One key proposal involves expanding insurance options outside the Affordable Care Act (ACA) framework, potentially lowering premiums for some individuals.

However, this could increase costs for those with pre-existing conditions who depend on the ACA’s protections. Additionally, reduced funding for ACA outreach may limit access to affordable coverage, potentially leading to higher out-of-pocket expenses for many Americans.

Another priority is addressing prescription drug costs. Trump has signaled support for measures allowing Medicare to negotiate drug prices directly, building on provisions introduced in the Inflation Reduction Act during the Biden administration.

If implemented, this policy could lead to significant savings on medications for many Americans, though it’s likely to face resistance from the pharmaceutical industry. These proposed changes could reshape healthcare, affecting both accessibility and affordability for millions of workers and retirees.

Preparing for Uncertainty in Trump’s Second Term

Bold and potentially disruptive policies, like those proposed by Donald Trump, can lead to a period of uncertainty, leaving long-term outcomes largely speculative. Markets often react to unpredictability with heightened volatility, which doesn’t necessarily mean a downturn but could signal a bumpy road ahead—especially in comparison to the relative stability of recent years.

Historical trends provide some reassurance: markets have tended to perform well under presidents from both parties. For long-term investors, the most effective strategy remains unchanged—stick to your financial plan and ride out the inevitable ups and downs.

However, to help you stay focused and confident during uncertain times, consider these actionable steps:

  • Build a cash reserve. Maintain a cash buffer to cover expenses and handle emergencies. This can reduce stress and prevent rash investment decisions.
  • Stay the course. Avoid drastic changes to your portfolio based on short-term news or speculation. Emotional reactions often work against long-term success.
  • Reassess your risk tolerance. If market swings feel overwhelming, consider adjusting your portfolio’s risk profile. However, avoid pulling out of the market entirely—timing it correctly is nearly impossible.
  • Limit portfolio monitoring. Constantly checking your account balances during volatile periods can heighten anxiety. Trust your strategy and resist micromanagement.
  • Continue investing regularly. Don’t abandon your saving and investing schedule. Dollar-cost averaging—making regular contributions during market dips—can position your portfolio for long-term growth.

By focusing on what you can control and maintaining a long-term perspective, you’ll be better equipped to navigate uncertainty and stay on track toward your financial goals.

Paving the Way for Long-Term Financial Success

As we embark on this new chapter, understanding how Trump’s second term could impact your financial future is key to making informed, confident decisions. While many proposed policy changes depend on Congressional action and remain uncertain, staying proactive and planning strategically can provide a sense of stability in the face of shifting dynamics.

Whether these changes create new opportunities or introduce fresh challenges, a well-thought-out approach empowers you to navigate the road ahead with confidence. Remember, you don’t have to tackle this alone—partnering with an experienced financial advisor can provide personalized guidance, valuable insights, and the peace of mind you need to adapt and thrive in an evolving financial landscape.

At Kukui Tree Capital Management, our mission is to support our clients at every stage of their financial journey, empowering them to achieve financial prosperity through comprehensive, tax-aware wealth management. If you’re looking for personalized financial planning and investment guidance, we’re here to help. Contact us today to schedule a “Get Acquainted” Meeting and see if we’re the right fit for you.