What to expect when you’re expecting Trump 2.0? Can he live up to the great expectations he set and alleviate the grave concerns? Let’s spell it out, in true T.R.U.M.P. style.
1. Tariffs and Taxes
Expectation:Donald Trump will quickly ratchet up his America First tariffs policy, potentially slapping 10% to 20% tariffs on all goods coming into the United States — and much higher duties on goods from China, especially cars. The bet is that this will stimulate job growth in the United States and stop the hollowing out of manufacturing caused by globalization and free trade. The Trump promise: Tariffs are “not going to be a cost to you, it’s a cost to another country.”
Concern: In reversing decades of Republican free trade policy, expansive tariffs will drive up the cost of goods for US consumers and increase inflation, as 16 Nobel prize-winning economists wrote in June. The Peterson Institute for International Economics — an independent nonprofit research group — wrote a paper arguing that Trump’s tariffs and tax cuts will push inflation up four points higher by 2026 than it would otherwise. Make America expensive again is one way to see it.
To counteract that, Trump will extend the major tax cuts which he put forward in 2017 and are set to expire next year. That will keep stimulating the economy alongside new tax cuts for corporations and individuals, but it won’t be enough to stop inflation. It also raises another concern: deficits.
According to studies like this one from Wharton, Trump’s deficits could reach between $3 and $7 trillion, up from $1.83 trillion today. “We project that conventionally estimated tax revenue falls by $5.8 trillion over the next 10 years, producing an equivalent amount of primary deficits. Accounting for economic feedback effects, primary deficits increase by $4.1 trillion over the same period,” the Wharton report says.
What will Trump do with big industrial policy programs like Biden’s Inflation Reduction Act, which so far has provided over $240 billion in spending and has earmarked another $60 billion for various green industries? Kill it and rescind all the unspent dollars. “To further defeat inflation,” he said recently, “my plan will terminate the Green New Deal, which I call the Green New Scam.” For the green tech world and industries like wind, solar, and even electric cars, this will be a major setback. There will be quick deregulation for oil and gas companies, and new and fast “drill, baby, drill” offshore leases will open up, along with more fracking and pipelines. Not all tax credits from the IRA will be removed, but support for buying EVs will. Expect this to be where Elon Musk makes a dramatic impact.
Prediction: Trump acts fast on some tariffs but not all. He will get a lot of internal pushback as members of his party worry that a series of international trade wars will be triggered, hammering their crucial exports and hurting their economies. Biden will scramble to get the Inflation Reduction Act money out the door, but I am already hearing reports that departments are freezing funds to prepare for the new administration.
2. Retaliation and Revolution
Expectation: With a strong mandate, Trump will have few checks and balances to stop him from taking action against those he has labeled “enemies of the people” or “the enemy within.” What’s more, Trump believes the Supreme Court has given the president total immunity from prosecution for actions undertaken as commander in chief.
An NPR investigation lays out over 100 threats that Trump has made in the last few years, ranging from prosecuting political opponents like President Joe Biden to taking away licenses from news outlets like CBS, NBC, and ABC.
Concern: Trump will try to dismantle what he calls the “Deep State” by reviving his infamous “Schedule F,” which would allow him to fire bureaucrats he doesn’t like and hire ones who agree with his policies.
Trump’s new team is much more experienced and ready than they were in 2016, and the agenda for a radical overhaul of the US government will be led by folks like Elon Musk and Robert F. Kennedy Jr. While there will be massive deregulation, the biggest concern will be a government that launches investigations into any group that challenges its policy.
Prediction: Mass layoffs in the federal government, overhauls of the Department of Education and the FBI, and legal challenges with multiple news organizations.
3. Ukraine
Expectation: While lame-duck Biden will try to get as much money and material to Ukraine before January, Trump will cut it off and try to force a peace. He promised to end the war within 24 hours and to do that he would have to force Ukraine to cede a massive amount of territory to Vladimir Putin.
Concern: NATO allies are in no shape to fill the US gap in aid. Without US assistance, Russia — now with the support of North Korean troops — will start to grab more land. How far will they go before they make a deal? That is up to Trump, but it is bad news for Ukraine.
Prediction: The war grinds on for a year, but eventually Ukraine — running low on equipment and money – will be forced to give up huge swaths of territory in the east. Putin has waited out the US and now has a sympathetic ear in the White House.
4. Mexican Border and the Middle East
On the Mexican border
Expectation: Trump will rapidly end birthright citizenship and begin a massive deportation program of up to 20 million people, which will require building detainment camps. Also, expect the so-called Muslim ban on certain countries to be revived from his first term.
Concern: Besides the key questions about the legality, morality, and practicality of mass deportations, there is the economic impact.
The American Immigration Council wrote a study saying that the deportation program would cost over $315 billion and be extremely difficult to manage. At the height of deportation efforts in recent US history, the country deported approximately half a million people in a single year — and most of those were turned away as they tried to cross, rather than being forced out of the country after they had settled. The long-term impacts of mass deportation on the US economy could add to a crisis. “Due to the loss of workers across U.S. industries, we found that mass deportation would reduce the U.S. gross domestic product (GDP) by 4.2 to 6.8 percent,” according to the AIC. “It would also result in significant reduction in tax revenues for the U.S. government. In 2022 alone, undocumented immigrant households paid $46.8 billion in federal taxes and $29.3 billion in state and local taxes. Undocumented immigrants also contributed $22.6 billion to Social Security and $5.7 billion to Medicare.”
Prediction: This is a core promise of the Trump 2.0 administration, and despite the fury this will cause, deportation programs will be set up quickly.
On the Middle East
Expectation: Trump is a strong supporter of the policies of Israeli Prime Minister Benjamin Netanyahu and his fight against Iran and proxies Hamas and Hezbollah. Trump will tell Bibi that he has a clear road ahead to finish the war — though what that means strategically remains unclear — but he will likely demand that the heavy fighting stop before the inauguration. Trump wants to fulfill his promise to end the war in Gaza and, in the process, defeat Iran’s Jihadist allies and ambitions.
Trump’s greatest foreign policy accomplishment in his first term was the Abraham Accords, in which both Bahrain and the United Arab Emirates recognized Israel’s sovereignty and established full diplomatic relations. Could his hard line on Iran build on this and turn the terrible war into a larger peace? That is the hope.
Concern: The biggest issue is that Trump’s unfettered support for Netanyahu will encourage Bibi to double down on his most aggressive strategic goals and undermine any possibility for a two-state solution by continuing massive bombardments in Gaza and Lebanon and by moving more settlers into the West Bank. It could trigger a major war with Iran and light up the entire region. It could also push the Iranians to finally build a nuclear bomb, which would incentivize the US to take military action.
Prediction: The war ends before Trump’s inauguration, but there is no plan for what comes next. Who governs Gaza or southern Lebanon? What is the plan for any rebuilding? What happens to the refugees? The hostages? The festering wounds of this bloody war are not going away soon, and expect ongoing protests in the US and around the world. Other terror groups, like the Houthis in Yemen, will continue to upend any attempt at peace. Worst-case scenario, the war on the battlefield turns into asymmetric terror attacks around the world. Things will get worse before they get better.
5. Pomp and Partisanship
Expectation: 2026 marks the 250th year of the great American experiment in democracy, and Trump has planned for a yearlong celebration that will include parades, a full-year US fair in Iowa, and multiple other events.
This will be the ultimate American and MAGA moment, twinning his remarkably resurrected political movement with the key US anniversary. The Trump dynasty will be tied to the American destiny.
Concern: This year would be celebrated by any president, so there is no over-concern in principle, but President-elect Trump is also the commander in chief of the culture war against what he calls wokeness. The culture war has animated his entire movement and its loudest proclaimer, Tucker Carlson. Expect these celebrations to reflect the administration’s values and to be strategically allied with the anti-woke messaging that has been so divisive across the country.
Prediction: Great parties in places like Iowa, increased tourism, and probably a military parade in Washington, which Trump has always wanted — but also big controversy. In a country where athletes quietly kneeling during the singing of the national anthem before a football game can become a major battle in the culture wars, there is a real risk that partisan politics will turn a year of unity into one of deep divisions. Let’s hope not.