The Impact of a Second Trump Presidency: Implications for Corporations and Society

Bottom Line

• Trump’s election represents a mixed bag for corporations, with potential positive or negative implications depending on the sector or industry. 

• As part of Trump’s ‘America First’ platform, his Administration will seek to implement protectionist trade policies, which will change the nature of the U.S. relationship with important allies, including Canada, Mexico, and the European Union (EU). 

• The Peterson Institute for International Economics assessed that Trump’s proposed policies, including import taxes, attempts to erode the independence of the Federal Reserve, and mass deportations, would drive consumer prices significantly higher.

Background

Donald J. Trump, the forty-fifth president of the United States, is now set to assume the presidency again as the forty-seventh U.S. president. At the time of publication, Trump won the electoral college vote by a count of 295 to 226 against current Vice President Kamala Harris with final projections estimated at 312 to 226. There is some sense of how Trump may govern, if past is prologue, although his mercurial nature also means that nothing is easy to forecast. Overall, he largely lacks guiding principles or a concrete ideological worldview and often makes decisions erratically, contradicting the counsel of some of his closest political, economic, and military advisors. 

It makes sense to take Trump at his word, since he typically, though not always, seeks to follow through on what he claims he wants to do. In terms of what this means for corporations, it will be somewhat of a mixed bag. On the one hand, Trump has promised to implement sweeping corporate tax cuts and even enshrine earlier cuts from the 2017 Tax Cuts and Jobs Act as permanent features. His Administration would move to roll back or entirely slash regulations, with different impacts experienced by different sectors—health care, energy, and finance are just three areas where he has pledged to reduce costs and stimulate investment in domestic industries. 

But Trump has also hinted at a trade war with China, a phenomenon that, if it occurred and intensified, would accelerate U.S.-China economic decoupling, which would have long-lasting implications for a range of multinational companies. Part of the decoupling process could be more pressure on companies to shift operations or parts of their supply chain out of China and perhaps to another country in Southeast Asia. Companies reliant on Chinese manufacturing and markets would suffer, especially in the short-to-medium term. 

Corporate Risks

As part of Trump’s ‘America First’ platform, his Administration will seek to implement protectionist trade policies. Some industries could benefit, e.g. steel and manufacturing, while many sectors such as agriculture, retail, and technology could face a volatile economic landscape dominated by uncertainty and increased risk. Protectionist policies will also change the nature of the U.S. relationship with allies, including Canada, Mexico, and the European Union (EU). 

Again, not all corporations would be negatively impacted by an ‘America First’ agenda, as it could incentivize domestic manufacturing and bring parts of the supply chain back to the United States. Pharmaceutical companies, defense manufacturers, and electronics conglomerates could receive incentives or subsidies to re-shore facilities currently based abroad. Still, Trump has at times spoken about making healthcare more competitive by lowering prescription drug prices, which could signal policies that seek to force greater transparency in drug pricing or allow the importation of pharmaceuticals from abroad. This would inevitably lead to revenue impacts, depending on whether particular specializations focused on the production of generic/lower-cost drugs or brand-name, higher-cost drugs. 

Energy companies should experience a boon with a renewed focus on oil, coal, and natural gas production, with Trump promising to “drill baby, drill” and stripping environmental regulations while also opening federal lands for exploration and drilling. 

Implications

It is also important to note that there are a number of economists who believe Trump’s policies could be disastrous for not just the U.S. economy but the global economy. The Peterson Institute for International Economics assessed that Trump’s proposed policies, including import taxes, attempts to erode the independence of the Federal Reserve, and mass deportations, would drive consumer prices significantly higher. 

Inflation would also skyrocket as a result of these policies. Beyond mass deportations, immigration policy more broadly will limit access to international labor markets, particularly in industries such as technology, healthcare, and agriculture. A paucity of available labor will create shortages, causing wages to rise in some sectors and increasing the operational costs for companies that depend on a readily available foreign talent pool. 

Social media companies could face a reckoning during a second Trump term. In general, conservatives have tried to argue that social media platforms have an anti-conservative bias, an argument even made by Elon Musk, a Trump surrogate who owns the platform X, formerly Twitter. If the Trump administration revisits regulatory changes under Section 230 (dealing with liability for user-generated content), it would vastly increase scrutiny on social media companies and likely lead to much higher compliance costs.

Overall, a second Trump presidency will impact different corporations in different ways. It will likely be favorable for businesses that are seeking big tax cuts, those that will benefit from significant deregulation, and others where less government oversight will lead to higher profit margins (though depending on the industry, cutting corners could have serious health, environmental, or safety risks). Those companies that could face major challenges are ones which rely on global supply chains, immigrant labor, or non-fossil fuels and renewable energy. In general, companies will need to remain agile and adaptive, as the only certainty is that a Trump presidency will introduce serious complexities into the operating environment for multinational corporations.