Donald Trump’s victory in the November election has raised many expectations about how his economic policies will affect Americans. With a promise to reduce inflation, cut taxes and increase economic growth, many are wondering how this will directly impact their finances. Here we explain Five Ways Trump’s Presidency Could Affect Your Wallet.
1. Tax reduction: more money in your salary?
One of Trump’s most notable proposals is the extension of the tax cuts implemented in the Tax Cuts and Jobs Act of 2017. This includes reducing tax rates and an increase in the standard deduction. If your plan is approved, middle-income households could receive a reduction of approximately $1,740 annually by 2026according to the Penn Wharton budget model.
High-income families could see even greater savings. However, this will depend on Trump’s ability to push these reforms through a divided Congress.
2. Tariffs and inflation: will the price of your purchases go up?
Consumers are already hurt by inflation, and Trump’s policies could make the situation worse. Trump proposes imposing tariffs on imports, including 10% on all products and even higher tariffs on Chinese products. These tariffs are basically taxes that American consumers have to pay.
It is estimated that a middle-class household could spend $1,700 more per year due to these fees.according to the Peterson Institute for International Economics. Additionally, the impact of these policies could increase inflation by up to 1%, bringing the rate to 3.4%, which would be above the Federal Reserve’s target.
3. The housing market: more expensive or cheaper?
Despite promises of economic growth, Trump’s policies could make it harder for housing to become more affordable. If inflation rises and construction costs rise due to materials tariffs, house prices could remain high.
Besides, his plan to deport millions of immigrants would affect the construction sector, which depends on migrant workers. As economist Lisa Sturtevant told CBS News, “the mass deportation proposal would negatively affect the housing industry, limiting the supply of labor and slowing the construction of new homes.”
4. Economic growth: will your income increase?
Trump hopes his corporate tax cuts will boost economic growth. By reducing the corporate tax from 21% to 15%, Companies are expected to increase their investments and job creation. This could lead to a small increase in gross domestic product (GDP) growth, around 0.3% more in 2026, according to Oxford Economics.
However, the impact could diminish over time, especially if deportation and tariff policies affect productivity.
5. Financial markets: what will happen to your 401(k)?
One of the areas where the effects of the Trump presidency could be positive is on the stock markets. Corporate tax cuts and deregulation policies could improve company profits and consequently drive up stocks.
Some experts suggest that Investments in stocks and pension funds could benefit if the market continues to rise. Solita Marcelli of UBS Global Wealth Management notes that tax cuts and possible deregulation of sectors such as energy and finance could “provide an additional boost to the market.”
Although Trump promises changes that benefit consumers, it is unclear whether he will be able to implement all of his policies, especially if Congress is against it. So while some of these proposals could lighten Americans’ wallets, others could create additional economic pressure.
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