Reverse, Revive, & Reshape: What Trump's Economic & Trade Policies Mean for Key U.S. Industries

Reshaping Economic and Trade Policies

 

President Trump’s past actions, campaign promises, post-election remarks, and early executive actions offer perspective on his economic and trade policies.

 

Tariff Increases for Top Trading Partners

 

Proposed tariff increases, initially expected to broadly affect imports from China, Mexico, and Canada, may instead target specific strategic sectors. These could focus mainly on the defense industrial supply chain, medical supplies, and energy production components, according to The Washington Post.

 

To what degree such tariffs will actually be implemented or used simply to extract concessions to shift trade balances in the United States’ favor remains to be seen, but trade partners’ responses so far have ranged from conciliatory to retaliatory.

 

New tariffs could have a spillover effect, says FDI Intelligence, with projects in Europe and Canada being less attractive, spurring more direct investment in the US. Generally, investors do not like this uncertainty; however, even before taking office, Trump announced a $20 billion foreign investment to build new data centers.

 

Economic Policy Outlook

 

The proposed economic policies under a second Trump administration are expected to have mixed effects. As covered by Forbes, the Federal Reserve’s Federal Open Market Committee discussed the possibility that changes in trade and immigration policies could affect the timeline to reach a 2% inflation target. Already, White House spokesperson Karoline Leavitt admitted that February 2025’s first economic report showing a 0.5% increase in inflation put the Trump administration behind target. But Leavitt countered by pointing to Trump’s sweeping plan for deregulation as hope for inflation relief.

 

A multitude of industries are watching closely for this promised deregulation, including the energy sector and banking. Global Finance magazine expects that “the most contentious changes in financial regulation under a second Trump administration will likely concern cryptocurrency.” Even more impactful than banking deregulation may be the elimination of federal watchdogs altogether. Trump has taken significant steps to eliminate the Consumer Financial Protection Bureau, created after the Great Recession to hold banks accountable for illegal and unethical practices but which Trump claims is rife with waste and overreach. Merger and acquisition activity could increase under the administration’s relaxation of antitrust regulations and policies more favorable to corporations.

 

Biden-era legislation also looms large over the economic discussion as it pertains to industry. A significant portion of the Infrastructure Investment and Jobs Act (IIJA) funding has not yet been awarded: “The Biden administration still leaves the Trump administration with $294 billion to award, including $87.2 billion in competitive grant making, where Trump’s agency staff will personally determine the winners,” according to Brookings.

Impacting Key Industries

 

Policy changes will have far-reaching implications for manufacturing, advanced technology, and key industries such as batteries, semiconductors, and sustainable energy. While some sectors will likely benefit from reshoring incentives and reduced regulations, others are expected to face challenges.

 

Manufacturing

 

Significant changes to the manufacturing sector are expected under the second Trump administration. With policies on tariffs set to affect supply chains, immigration policies impacting the availability of skilled labor, foreign relations shaping international conflicts in Ukraine and Palestine, and shifting tax incentives tipping the scales for foreign investors, it’s too early to tell which manufacturing sectors will benefit. These interdependent factors are only just beginning to reveal the effects of widespread changes.

 

Reshoring incentives

 

Higher tariffs will likely encourage some manufacturers to move production back to the U.S., potentially boosting domestic manufacturing. However, there is a manufacturing skills gap in the United States. Well before the 2024 election results, Deloitte findings showed that US manufacturing was expected to have 2.1 million unfilled jobs by 2030, and that the economic impact of protracted job openings is significant.

 

Supply chain disruptions

 

According to Supply & Demand Chain Executive, “Many U.S. manufacturers rely heavily on imported components and raw materials in their production processes. Higher tariffs on these inputs could significantly increase production costs, potentially offsetting any benefits gained from reduced competition from imported finished goods.”

 

Trade uncertainty

 

The Q4 2024 Manufacturer’s Outlook Survey revealed that trade uncertainty was the top challenge for large manufacturers. This level of uncertainty rose significantly from Q3.

 

Advanced Technology

 

The tech sector is likely to experience both opportunities and challenges:

 

AI development

 

According to MIT Technology Review, US military initiatives demonstrate an eagerness to adopt AI, and European militaries could increase their investment if the Trump administration cuts funding for Ukraine.

 

Antitrust concerns

 

A more lenient approach to antitrust regulation will likely affect tech giants. With the Google antitrust case going to trial in April 2025, Trump and the DOJ have time to change course according to law professor William Kovacic, as reported by Reuters.

 

Immigration policies

 

According to CBS News, “Labor market data suggests that American tech workers aren’t in short supply, and critics of the H-1B program say it displaces Americans in favor of foreign-born employees hired at lower salaries.” Despite rifts in the Republican party, Trump appears to support H-1B visas for skilled workers. Debate over immigration policy is expected to continue.

 

Battery and Semiconductor Industries

 

New policies affecting semiconductor and battery manufacturing signal potential changes in how the U.S. approaches these strategically critical industries.

 

CHIPS and Science Act implications

 

Although the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act isn’t the type of legislation generally supported by the Trump administration, support for domestic production is likely to continue thanks to the benefits that Trump-aligned states and communities have enjoyed, as well as the advantages inherent to building an advanced domestic industry.

 

Supply chain investment

 

The mandate to reduce dependence on foreign suppliers, particularly China, could increase investment in domestic battery and semiconductor production.

 

Environmental permits

 

Some of President Trump’s first actions took aim at U.S. environmental and energy policy. The administration revoked 78 Biden-era actions, including land and water protections prohibiting oil and natural gas drilling and pipelines. According to Chemical & Engineering News, policy analyst Bryan Bille says that the new administration could speed the federal government’s permitting process for companies planning mining and metal-refining projects.

 

Sustainable Energy Industry

 

More than any other, the U.S. energy industry faces large-scale policy changes which may shape the U.S. role as well as partner investments for decades to come.

 

In the first days of his second term, Trump declared a “national energy emergency,” authorizing mining activities for natural gas, oil, non-fuel minerals, and more while terminating the American Climate Corps., the Interagency Working Group on the Social Cost of Greenhouse Gases, and the Green New Deal. Another administrative order took aim at wind energy—a persistent complaint in the president’s speeches over the past 10 years, in and out of the Oval Office.

 

Whether or not the Inflation Reduction Act (IRA) will be repealed remains to be seen. According to CNBC, phase-out dates for tax credits are likely to be accelerated, and the consumer tax credit for electric vehicles will probably be dismantled, as Trump has already taken steps to end the mandate for manufacturers to transition to all-electric production. However, IRA investments reduce reliance on foreign supply chains, which is in alignment with Trump policies.

Considering Opportunities and Risks

Strategic decisions facing business leaders have rarely been more complex, as new policies create opportunities for growth and the risk of significant operational challenges.

 

Increased domestic manufacturing: Policies favoring reshoring could stimulate U.S. manufacturing growth.

 

Reduced regulatory burden: Deregulation has the potential to lower costs and accelerate innovation.

 

Accelerated AI and tech development: A less restrictive environment for AI and technology development could foster innovation.

 

Less restricted corporate growth: A business-friendly environment would likely lead to increased mergers, acquisitions, and overall corporate expansion.

 

Trade tensions: Aggressive tariff policies could negatively affect U.S. exports and global competitiveness.

 

Supply chain uncertainty: Changes in trade policies could cause significant disruptions to supply chains.

 

Consumer cost increases: The Consumer Technology Association shared research showing that tariffs on technology products could lead to a $90-$143 billion decline in U.S. consumer purchasing power. The U.S. automotive industry has close ties with Canada and Mexico, so duties on imports from those countries could also impact consumer pricing on vehicles.

 

Innovation challenges: Stricter immigration and trade policies may hinder access to global talent and technologies.

 

Economic instability: Tariffs, potential trade wars, and significant policy shifts might lead to economic uncertainty and market volatility.

 

Environmental impact: Less focus on sustainable energy and environmental protection will impact climate change mitigation and the sustainable technology sector.

 

The immediate and long-term impact of new policies will depend on their implementation and the global economic context. As the new administration takes shape, businesses in affected industries will need to adapt quickly to the shifting economic environment.