/>iThe re-election of former president Donald Trump as the 47th President of the United States will have major implications for the key policy issues described below. Empowered by a Republican majority in both chambers, though slim, Americans should expect emphasis on sweeping policy and regulatory changes to come during this next term. Although we cannot predict exactly what the next year will look like, let alone the next four years, we can make preliminary assumptions based on what President-elect Trump’s first term looked like, promises he made on the campaign trail, and inside knowledge we hear through our extensive network on Capitol Hill.
The people President-elect Trump chooses for his Cabinet who are confirmed or who may otherwise be appointed, as well as those who will have leadership positions in Congress will have a major impact on how these policy issues play out.
Below are our initial insights on key issues relevant to a broad spectrum of organizations, companies, and interests. This is an evolving story, no doubt with a multitude of twists and turns. We will be providing regular updates to these links in our Weekly Congressional Updates as developments occur.
Budget and Tax
Budget
The election could immediately impact the U.S. budget for fiscal year (“FY”) 2025. Although the deadline for FY25 appropriations bills was the end of September, Congress is operating under a continuing resolution (“CR”) until December 20, keeping funding at FY24 levels without implementing FY25 earmarks. House Republicans are considering a short-term CR extending funding through March 2025, allowing President-elect Trump to influence FY25 funding. If extended until next year, expect domestic budget cuts and increased border and defense spending. There is also talk on Capitol Hill about passing a CR that extends through the end of FY25. Some appropriators prefer wrapping up spending before year-end with an Omnibus Appropriations package to avoid an early funding fight for the Trump Administration with respect to “left over” FY25 funding. For FY26, expect significant domestic spending cuts, with Elon Musk and Vivek Ramaswamy leading an advisory cost-cutting mission to streamline bureaucracy and dramatically reduce spending, proposing reductions in the size of the federal workforce and in the dollar volume of federal contracts.
Tax
Push to Renew TCJA: The Tax Cuts and Jobs Act (“TCJA”), the tax bill signed into law during Donald Trump’s first term, has many provisions set to expire in late 2025. Key features of the TCJA include a reduction in tax rates for individuals, a doubling of the standard deduction, more generous estate and gift tax exemptions, and a significant cut in the corporate tax rate. One of the top priorities of the incoming Administration is to extend the expiring provisions and make the tax cuts permanent. President-elect Trump has proposed getting rid of one of the more contentious provisions set to expire in TCJA, the tight limitation on deductions for state and local taxes, also known as SALT.
Several new tax provisions may be added in the next tax bill which were promoted by President-elect Trump during the campaign. This could include tax exempt tips, exempting Social Security from income taxes, exempting overtime pay, and creating a deduction for Auto Loan interest. In 2017, the TCJA reduced the corporate tax rate from 35 percent to 21 percent, and Mr. Trump has proposed reducing that rate to as low as 15 percent. Any significant changes will have to go through Congress.
Cuts to Energy Tax Credits: Rollbacks may also occur regarding personal and corporate renewable energy and conservation tax credits as well as carbon credits passed during the Biden Administration in the Inflation Reduction Act. For example, electric vehicle tax credits could be repealed or modified. We expect to see an effort early next year to use the “Budget Reconciliation” procedure in Congress to implement the tax and budget priorities of the incoming Administration. The Reconciliation process allows for tax and budget legislation to pass via a majority vote (not requiring the usual 60 votes in the Senate) but provisions must strictly adhere to the Rules of the House and Senate that all provisions in the bill relate directly to spending or revenue. Passing a Reconciliation bill could be tough with the Republican margin as narrow as it is in the House.
New Tariffs Abroad: President-elect Trump is a strong proponent of imposing tariffs. During his campaign he proposed a 10 to15 percent tariff on all U.S. imports and up to 60 percent tariff on Chinese products. As opposed to tax policy, which largely relies on congressional approval, tariffs can often be directly implemented by executive order. Mr. Trump’s reliance on import tariffs to offset the cost of tax cuts comes with potential major downsides. Although the extent to which these across-the-board tariffs may be implemented is not yet clear, Trump’s proposed tariffs and anticipated retaliation from trading partners could offset, to a greater or lesser degree, the benefits of his tax plan and negatively impact economic growth in the United States.
Defense and Small Business Contracting
Defense
Increased Budget Expected: President-elect Trump has historically advocated for increased defense budgets, focusing on missile defense, cyber warfare, and space operations, with potential moves like relocating Space Command to Huntsville, AL. Alongside this, there may be efforts to reduce inefficiencies and unnecessary expenditures within the Department of Defense, appealing to fiscal conservatives. Strategically, the United States is expected to emphasize countering China and Russia with investments in advanced military technologies, while maintaining strong support for Israel and a presence in the Middle East. Military modernization will likely prioritize artificial intelligence (“AI”), autonomous systems, hypersonic weapons, and nuclear deterrence. Additionally, there may be cultural and structural changes within the military, such as reducing high-ranking officers and shifting to merit-based promotions, and potentially adjusting force deployments to focus more on domestic priorities.
“America First” Foreign Policy and Increased Border Security: When it comes to foreign policy, we anticipate President-elect Trump to take a more isolationist or domestic-focused military strategy. There will also be a major emphasis on strengthening national security by securing the border. Mr. Trump on the campaign trail pledged to secure the U.S.-Mexico border by finishing construction of a wall and by conducting comprehensive deportations of undocumented migrants, concentrating initially on those with criminal records, with the help of local law enforcement agents or the National Guard.
Small Business Contracting
Expansion of Tax Cuts: The President-elect has promised to make the TCJA permanent, which included a deduction of up to 20 percent for small businesses’ income. He also proposed during his campaign to lower the corporate tax rate to 15 percent from 21 percent for businesses manufacturing domestically.
“Buy America” Trend to Continue: Small businesses should be prepared for a continuation of regulatory actions that require products to be wholly produced and manufactured in the United States. One of President-elect Trump’s strongest campaign messages was a promise to impose tariffs on imported goods, including up to a 60 percent tariff on Chinese imports. Small businesses that rely on imported products or materials will have to take on the cost of the tariff by paying it themselves or raising costs for consumers.
Cut-Back on Regulations: Mr. Trump has historically supported cutting back regulations for small businesses and has made it clear this will be a big theme for his administration in his next term. He has called for reversing regulations set by the Biden Administration and cutting through the “red tape.”
Energy and Transportation
Energy
Environmental Regulations and the EPA: The second Trump Administration’s approach to environmental regulation might look somewhat similar to the first Trump Administration. It has been reported that the new Administration will possibly re-examine a variety of regulations. Some that may merit a re-examination are the California Waivers, the Environmental Protection Agency’s (“EPA”) Clean Power Plan, and vehicle emissions standard – colloquially known as the ‘tailpipe rules.’ Additionally, the new administration may also review the EPA’s budget and size of its workforce. Former Congressman Lee Zeldin has been nominated to be the EPA Administrator. Permitting reform and National Environmental Policy Act (“NEPA”) process streamlining are also top priorities.
Energy Department Realigned with Fossil Fuel Production: The Administration will potentially emphasize all aspects of fossil fuel production. Some have suggested it will scale back its focus on renewable energy, but this has not been confirmed. Chris Wright, CEO of Liberty Energy, has been named as the presumptive nominee to lead the Department of Energy. On the campaign trail, President-elect Trump suggested the United States may withdraw from the Paris Climate Agreement and take a closer look at the climate change and energy provisions within the Inflation Reduction Act that he argues inhibits U.S. energy independence. It has been reported that the new Administration may also target some of the tax credits in the Inflation Reduction Act such as hydrogen (and certain electric vehicle tax credits).
Transportation
Impacts on Transportation Infrastructure Projects: Former Congressman Sean Duffy has been named to serve as the Secretary of Transportation. Duffy’s statements and positions on transportation largely align with his conservative views on infrastructure, government spending, and investment in rural America. Duffy’s statements have emphasized reducing bureaucratic hurdles, focusing on rural infrastructure needs, and ensuring that transportation investments are both efficient and locally driven. His broader transportation-related positions fit within his general philosophy of promoting economic growth through limited government intervention.
Under a Trump Administration and a U.S. Department of Transportation (“DOT”) Secretary favoring less federal intervention, discretionary grants from the DOT and the eligibility for them may change in scope, preference, and funding. Regarding claw-backs, much of the money in the Infrastructure Investment and Jobs Act (“IIJA”) flows by formulaic funds tied to statutorily designated user fees from gas tax receipts into the Highway Trust Fund; these formula funds would continue to flow directly to States, transit agencies, and airports. There is also the use of Advanced Appropriations in the IIJA, which would flow automatically to federal agencies for competitive federal grants. If a Trump Administration desires to halt or even claw back these funds, Congress would have to enact legislation needing 60 votes in the Senate or use the budget reconciliation process. A Trump Administration can also slow the rollout of federal competitive grants to recipients at its discretion.
For transportation infrastructure projects, the Trump administration may modify the terms of the way States and organizations receive funding. The Trump infrastructure plan in his first administration sought to offset its costs by shifting some of the cost burden to States to help pay for major infrastructure projects.
Natural Resources and Native American Issues
Natural Resources
Energy Priorities: One of President-elect Trump’s key talking points during the campaign was vowing to boost domestic energy production, with oil and natural gas at the forefront of this effort. He may also boost nuclear and hydropower. It is expected by some that Mr. Trump may seek to reduce federal support for solar and wind energy projects. However, because a number of these projects are in states or districts with Republican elected officials, we expect there to be continuing support for solar and wind energy, albeit with less emphasis than during the Biden Administration. Expanding domestic pipelines and increased coal production will be supported under his administration, and he has indicated that he will quickly reverse President Biden’s pause on liquified natural gas exports (“LNG”).
Permitting Reform: It is also likely that Trump will support reforming the NEPA’s permitting process to streamline energy projects and limit the scope of, and timeline for, environmental review. This has been a major agenda item in the recent past for outgoing Senate Energy Committee Chair Joe Manchin (I-W.V.), but Congress has been unable to pass a bill after years of efforts to reach a deal. However, many observers in Washington have noted that given the election results, the prospects for meaningful permit reform and environmental review streamlining have improved significantly.
Native American Issues
Tribal Sovereignty: During President-elect Trump’s campaign, he made a major promise to the Lumbee Tribe of North Carolina during a rally, vowing to grant them federal recognition if he's reelected in November. During Mr. Trump’s first term, he passed three bills aiming to “support tribal sovereignty and native culture”. These bills included compensation to the Spokane Tribe for the loss of their lands in the mid-1900s, reauthorization of funding for Native language programs, and federal recognition of the Little Shell Tribe of Chippewa Indians in Montana. Trump did not lay out many specific plans for Native lands during his campaign, but we are hearing that it can be expected he will continue to support tribal self-determination, particularly with respect to economic development priorities for Native Americans, Tribes, Native Organizations, and Native Lands.
Education and Health: The new Trump Administration will likely continue to make cuts to many of the budget items that it did when Mr. Trump was originally in office. The administration will emphasize alternative private health providers. The Trump Administration is also likely to continue its support of school choice and reduced federal oversight of schools.
