Former President Trump’s reelection has been welcomed by many business leaders and investors. The day after the election, when Trump’s victory was confirmed, the S&P 500 index rose by over 2.5%.
Many are anticipating that the Trump administration will reduce taxes, loosen regulations, and roll back many of the signature projects of the Biden administration. This includes government mandates to transition from fossil fuel energy to wind and solar energy, as well as from oil-powered vehicles to electric cars.
Former CEO of CKE Restaurants, Andy Puzder, told The Epoch Times, “Many CEOs in America have had enough.”
“Just look at the stock market the day after the election to see clearly how American CEOs and businesses feel about Trump winning the presidential election,” Puzder added.
Regulatory policy could be the area most directly impacted by the new government on businesses.
The conservative think tank American Action Forum (AAF) analysis shows that by August of this year, the Biden administration had introduced 994 new regulatory rules, resulting in a $1.69 trillion increase in costs for American businesses. In comparison, during Trump’s first term, his administration introduced 1,084 new regulations, most of which eased regulations and reduced costs for businesses by $99 billion.
Dan Goldbeck, Director of Regulatory Policy at the American Action Forum, told The Epoch Times, “Agencies like the Environmental Protection Agency and the Department of Energy acknowledge in their cost-benefit analyses that energy efficiency regulations will increase the upfront costs of products.”
A study by economist Casey Mulligan from the University of Chicago in July showed that regulatory measures implemented by the Biden-Harris government increased costs by $47,000 per American household, while deregulation during the Trump administration reduced costs by nearly $11,000 per household.
For example, the new fuel economy standards set by the Biden administration are expected to increase the cost of new cars, trucks, and SUVs by $3,400. The Biden administration also imposed strict new emission limits on power companies and introduced new efficiency regulations for boilers, water heaters, air conditioners, dishwashers, and other household appliances.
In contrast, Trump promised at an October campaign rally to “sign executive orders directing every federal agency to immediately cancel burdensome regulations that raise the cost of goods.”
Trump has also appointed Elon Musk, founder of Tesla and SpaceX, to head a newly established Department of Government Efficiency, with the goal of cutting $20 trillion or more from the federal budget.
Tim Schwarzenberger, portfolio manager at Inspire Investing, told The Epoch Times, “If the Department of Government Efficiency established by Musk can indeed achieve the goal of budget cuts, and they have the courage to take on the government bureaucracy, this will have a positive impact on the long-term development of the economy but may cause short-term pain.”
Although Schwarzenberger predicts an economic downturn at the beginning of Trump’s term, he also believes that Trump’s policies “may mitigate the severity of the economic decline because he will cut taxes, loosen regulations, promote energy production, reduce green energy projects, and potentially reform Medicaid.”
Analysts suggest that the energy industry in the United States will be one of the most affected industries by the change in government.
Peter Earle, Senior Economic Editor at the American Institute for Economic Research, said in an interview with The Epoch Times, “Trump may lift regulations and restrictions on hydraulic fracturing and other energy production, which is good news for industries such as oil drilling, refining, transportation, manufacturing, and aviation.”
Despite restrictions on drilling on federal lands by the Biden administration, the US oil and gas production continues to break records. According to a report by the US Energy Information Administration in March, “According to our international energy statistics, US crude oil production over the past six years has exceeded production by any country at any time.”
Given America’s abundant energy resources, analysts believe there is still significant room to increase domestic production.
Dan Kish, Senior Vice President of Policy at the Institute for Energy Research, told The Epoch Times, “Our country’s energy production has reached new highs, but all of this has happened without government regulation, on lands not owned by the government.” He continued, “We believe that the United States has no reason to lack affordable and reliable electricity or energy.”
Expanding energy production, especially in oil and natural gas, has been a cornerstone of Trump’s economic agenda.
Ryan Yonk, economist at the American Institute for Economic Research, told The Epoch Times, “One of the key proposals in the energy sector is to streamline permits for drilling on federal lands and encourage new natural gas pipelines, ultimately leading to increased supply, lower consumer costs, and a positive impact on the economy.”
Coal plants facing closure due to new emission regulations may have a brighter future under the Trump administration. According to data from the US Department of Energy, by 2035, nearly a third of the existing coal-fired power plants in the US plan to close. However, this scenario may change.
Duke Energy, a power company serving North Carolina, Florida, Indiana, Ohio, and Kentucky, could continue operating coal plants if the Trump administration rolls back environmental regulations imposed by the Biden administration, according to CFO Brian Savoy.
However, allowing oil and gas companies to increase production from existing wells is one thing, while investing heavily in exploration and constructing new wells and refineries is another. Beyond regulatory uncertainty, a decade of overinvestment resulting in surplus supply and lower prices has hindered further investments. Analysts suggest that the incoming Trump administration, by reducing regulatory costs and ensuring the industry is not targeted by climate regulations, may lower cost structures enough to attract renewed investment.
Puzder noted, “What Trump did in his first term, and what Biden did not achieve, was lowering oil prices and continuing to increase oil production at a faster rate.” He added, “This affects overall inflation, as oil companies can profit at lower prices per barrel.”
Many analysts predict that if Trump can lower energy prices during his second term, it will have a ripple effect on the US economy.
Retail gas prices had already started decreasing in the final years of the Obama administration, falling to under $2 per gallon in Trump’s first term and staying below $3 per gallon throughout his tenure. Under the Biden administration, oil prices surged to over $5 per gallon at one point, later dropping to the current range of $3 to $4 per gallon.
High prices of commodities are heavily influenced by energy input costs. “Everything that affects egg prices is affected by energy prices—the warming of chicken coops, the energy consumption in producing chicken feed, the transportation of eggs, and refrigeration,” Kish explained.
However, the renewable energy sector had a negative reaction to Trump’s victory in the stock market.
The stock price of solar energy developer Sunnova Energy plummeted from $6.90 per share on election day to just over $3.96 per share the next day, continuing to decline to slightly over $3 per share by the end of the week. More broadly, the solar index CFD tracking publicly traded companies in the solar industry dropped from $42 before the election to $36 by the weekend.
One possible reason for this decline could be the anticipated resistance to federal regulations and subsidies supporting the industry.
Energy analyst and writer Robert Bryce told The Epoch Times, “Trump promised to kill the offshore wind industry on his first day in office. There’s no reason to doubt he will do so, which is good news for whales and taxpayers.”
Moreover, Bryce stated, “The Biden administration has earmarked vast swathes of land in the western United States for wind and solar farm development.” He added, “I expect Trump and his appointees to pull back this land, and even possibly reverse some approved permits.”
Achieving net-zero emissions has been a core goal of the Biden-Harris administration, with a commitment made in April 2023 to achieve carbon-free electricity by 2035 and a net-zero emissions economy by no later than 2050.
The 2022 Inflation Reduction Act allocated approximately $400 billion in tax breaks, federal loans, and subsidies for American “green” energy production, primarily wind and solar, along with nuclear power.
However, a report written in 2021 by economists Michael Greenstone and Ishan Nath from the University of Chicago’s Climate School analyzed the Renewable Portfolio Standard (RPS), which requires utilities to source between 2% and 5% of their electricity from wind and solar. The report concluded that “seven years after the RPS, electricity prices rose by 11%.”
Additionally, a report from Columbia University’s Climate School in 2021 found that as renewable energy surpasses the minimum threshold in the energy mix, electricity costs will rise. The author of the report, Lucas Toh, wrote, “The continued push for abundant and affordable clean energy narrative poses a significant political risk when the public has to foot the bill for their unanticipated costs.”
Tax policy is another area where many expect significant changes under Trump’s leadership.
Many of the tax cuts promised by Trump during his campaign would require cooperation from Congress, with Republicans now controlling both the Senate and the House.
Of particular importance is whether Republicans can successfully extend the 2017 Tax Cuts and Jobs Act (TCJA), which is set to expire in 2025.
The TCJA reduced the corporate tax rate from 35% to 21%, and while this rate did not expire, both President Biden and Vice President Harris have proposed raising the corporate tax rate to 28%.
If the TCJA is not extended, individual income tax rates will rise, standard deductions will decrease, and child tax credits will be reduced. The highest tax rate will increase from 37% to 39.6%, with the $10,000 limit on state and local tax deductions no longer applying, mainly benefiting affluent individuals in high-tax states like California and New York.
Maintaining these tax cuts can stimulate consumption and investment, a view supported by many economists. However, critics fear this will reduce government revenue, increase the federal deficit, with the Congressional Budget Office forecasting the federal deficit to reach $19 trillion by the end of this year.
According to data from Statista, government revenue does not always correlate with tax rates; if tax cuts can bring significant economic growth, it may eventually increase tax revenue. Since the passage of the TCJA, government tax revenue has continued to rise, from $3.3 trillion in 2017 to $4.4 trillion in 2023.
Other parts of Trump’s tax plan have received more negative evaluations.
Including his commitment to impose a 20% tariff on most imported products, a tariff of up to 60% on Chinese imports, covering electric vehicles, wind and solar components, furniture, toys, clothing, and sports equipment.
Erica York, an economist at the Tax Foundation, stated, “Such import tariff rates would raise the average tariff rate on all imported goods to the highest level since the Great Depression.” This may harm the retail industry and exacerbate inflation.
It remains unclear how different Trump will be from his predecessor in terms of US-China trade.
According to the Tax Foundation, during his tenure, Trump imposed around $80 billion in new import tariffs on thousands of products like steel, aluminum, appliances, semiconductors, and solar panels, with many products coming from China.
The Biden administration retained most tariffs and, in May, imposed an additional $3.6 billion in tariffs on Chinese imports, including semiconductors and electric vehicles. The Trump administration collected $89 billion from the ‘trade war’ tariffs, while the Biden administration has collected over $144 billion.
Additionally, Trump pledged not to tax tips, a pledge also supported by Vice President Harris, but some skepticism remains.
“One of the most popular proposals is to reduce or stop taxing tips and overtime pay for service workers, or to remove taxes on social security benefits,” Yonk said.
Yet, York argued that these small-scale efforts have minimal overall economic benefits, further complicating tax laws and raising questions about fair treatment of labor outside the service industry.
“Instead, continuing and expanding the first term’s tax cuts, rather than narrowly targeting specific groups, will have better economic effects and create widespread tax relief, rather than setting up special programs for smaller groups,” he said.