Days from now, President-elect Donald Trump will begin his second term in the White House backed by a largely loyal, Republican-held Congress, big business pivoting to align with MAGA priorities, donors on pace to give $500 million to support his agenda, and a vastly empowered MAGA-friendly media and information ecosystem. Despite a historically small Republican margin in the U.S. House of Representatives, quite a few House and Senate Democrats appear open to working with him on the issues that won him the presidency, such as border security, public safety, the economy, and the efforts to cut wasteful government spending. A diverse group of Democrats, from centrist and swing-state lawmakers to those farther off to the left, voted last week to pass an immigration enforcement bill, reflecting pragmatic considerations on the ground amid the Democratic Party’s efforts to recapture voters’ trust and refocus its messaging ahead of next year’s midterm elections.
Trump’s early priorities include releasing as many as 100 executive orders on his first day in office, encompassing immigration, border security, trade, energy, and rollbacks of some of President Joe Biden’s landmark policies related to greenhouse gas emissions and electric vehicles. That will be followed by a sprint to fill key administration posts, fund the government for the rest of FY2025, raise the federal debt limit, and put together one or two massive packages of border, energy, and tax provisions, expected to be passed with Republican-only votes in the coming months. On a foreign policy front, Trump now promises to end the war in Ukraine within six months of taking office (rather than within 24 hours) while claiming credit for a nascent Gaza ceasefire deal negotiated on Biden’s watch. The details of Trump’s proposed tariff offensive against China, Mexico, Canada, and other trading partners are still being worked out (more on that below) and will likely remain in flux as governments around the world maneuver to limit potential damage to their economies or political standing.
Trump supporters have long argued that the president-elect should be taken seriously but not literally. Polling shows Trump in a stronger political position now than at the start of his first term, although few of his priorities seem to match those of U.S. voters, who want him to focus on economic issues (at 47%) over deporting immigrants (21%) or imposing tariffs on foreign goods (2%). Clearly, many Americans are willing to give Trump the benefit of the doubt — but time will tell if more of them come to embrace some of the most divisive elements of his agenda, such as investigating his political opponents or pardoning participants of the January 6, 2021 attack on the U.S. Capitol.
During his presidential campaign, Donald Trump floated minimum tariffs of 10% to 20% on all imported goods, and 60% or higher on shipments from China. Whether he still stands by those targets, and just how aggressively he is planning to pursue them, remains less clear. Latest reports point to a tension between a desire to “go big” with duties on a broad range of countries and categories of goods, and a surgical approach envisioning gradual tariff increases or covering only those sectors deemed critical to U.S. national or economic security.
To maximize disruption, Trump could tap the International Economic Emergency Powers Act (IEEPA), which authorizes a president to manage imports during a national emergency, to unleash blanket tariffs on allies and adversaries alike without having to justify them on national security grounds. In 2019, he used the IEEPA to threaten tariffs on Mexican imports to get Mexico to reduce the number of undocumented migrants crossing the border with the U.S. He could reprise this tactic, threatening Mexico and Canada with 25% tariffs and China with an additional 10% tariff, perhaps ramped up in 2% to 5% monthly increments, until they act to reduce migration and drug trafficking.
In a more targeted approach, Trump could expand the use of Section 301 or Section 232 tariffs on critical imports, which could include goods in the defense industrial supply chain, critical medical supplies, and clean energy imports like batteries, rare earth minerals, and solar panels. (A Trump transition team document previously recommended imposing tariffs on all battery materials globally in a bid to boost U.S. production, and then negotiating individual exemptions with allies.) If implemented, such an approach could limit business uncertainty and allow for corporate exemptions but still raise consumer prices and cause trade partners to retaliate, as China did against the tariffs imposed both by Trump and President Biden since 2018. We are watching Canada and Mexico, the U.S.’s closest trading partners, calibrate their approach in response to Trump’s negotiating tactics, one day threatening to reciprocate his tariffs and the next offering to buy more American and fewer Chinese goods or stepping up efforts to curb U.S.-bound flows or drugs and migrants.
Biden administration officials are betting that some of President Biden’s latest actions on clean technology could survive the Trump presidency. Among those are the new, technology-neutral 45Y and 48E clean electricity tax credits introduced as part of the Inflation Reduction Act (IRA) and projected to do more than any other IRA provision to reduce America’s carbon emissions. The new tax credits follow a basic formula that has long applied to wind and solar projects and extend it to a wider range of clean energy sources, including geothermal, nuclear, advanced batteries, and certain kinds of biofuels. Some, like nuclear and geothermal, have the support of Chris Wright, President-elect Trump’s nominee to lead the Department of Energy, and congressional Republicans who advocate ending the incentives for technologies like wind and solar. The way the law is written, no single technology can be excluded from the tax credits, making them relatively safe from Republican attempts to cut federal spending on clean energy transition.
Another recent Biden move allocates $635 million in grants to build out EV charging and other clean transportation infrastructure across 27 U.S. states and the District of Columbia. The funding is part of the $7.5 billion made available for this purpose under the 2021 bipartisan infrastructure law. Despite a slow rollout, much of the funding has been formally committed to specific projects, likely putting it out of reach of the incoming Trump administration (especially considering special budgetary guardrails written into the law). That being said, Trump could redirect some of the remaining funds to other alternative refueling technologies, such as hydrogen and propane, which are also covered under the program.
