What will a second Trump term mean for your money? Experts weigh in

The economy was one of voters’ top concerns during the presidential election. According to a Pew Research survey last September economy surpassed healthcare, foreign policy and crime as leading issues.

We’re all wondering how President-elect Donald Trump’s policies could affect our finances over the next four years. Not all of Trump’s policy details have been laid out, and implementation of many of his proposals would require congressional approval. While it’s impossible to know all the answers, here’s what experts say we can expect from Trump’s next term, which starts on January 20, 2025.

Tariffs and mass deportations can drive up prices

The president-elect has spoken out about two plans: high tariffs on imported goods and mass deportation of illegal immigrants. If the government implements either or both, US prices could rise.

Tariffs, which increase the cost of directly imported products and imported supplies used in U.S. manufacturing, serve as a tax on consumption, according to U.S. authorities. Usha Haleya professor at Wichita State University and an expert on trade with China.

“Trump’s proposed tariff of 60% on all imports from China and 20% on imports from other countries will increase costs for end users throughout the supply chain,” Haley said. Although companies can absorb some of the impact of lower profit margins, importers often pass on some of these tax costs to consumers in the form of higher prices.

Massive deportation efforts could also increase prices due to the significant impact on the labor force, he said David AndersonBlazer professor of economics and business at Center College in Danville, Kentucky.

“Immigrants are critical to industries such as agriculture, health care, construction, food and transportation,” Anderson said. “Fewer workers in these and other areas would put upward pressure on labor costs and prices.”

Inflation, the rate at which prices of consumer goods and services change in a year, rose to record levels in the wake of the pandemic. Following the Federal Reserve’s aggressive post-pandemic rate hike campaign that began in 2021, inflation has return slowly at the central bank’s annual interest rate of 2%. However, prices still remain high after years of rate increases.

The Federal Reserve was preparing for further cuts to the federal funds rate in 2025, which would lower borrowing costs. But if tariffs and mass deportations fuel inflation, interest rates are likely to remain high in the short term.

Some tax cuts will be extended, others may disappear

Most experts expect Trump to expand and possibly expand the policy Tax Cuts and Jobs Act of 2017which expires in 2025.

The TCJA was passed during the first Trump administration in January 2018. Some of the notable tax breaks that are still in effect include:

• Lower individual income tax brackets. When you pay income tax, you pay one of seven tax rates, depending on your income tax bracket. The TCJA reduced five of the seven tax rates.

• A higher standard deduction. Most taxpayers claim the standard deduction. The TCJA has nearly doubled the amount you receive.

• Increased child tax credit. You can receive up to $2,000 through the CTC, up from the previous $1,000.

While the TCJA lowered taxes for many households, most of the benefits from expanding this tax law would go to those earning $450,000 or more, according to a study. recent report by the Tax Policy Center. About 75% of households would see some form of tax cut, but 45% of the policy’s tax benefits would go to high earners, the report found.

However, the new government does not intend to extend all tax benefits. Other tax credits, such as the EV tax credit, can reduce your tax bill by $7,500 if you purchase a qualifying electric vehicle, and will likely be eliminated.

Other tax plans, like Trump’s proposal to offer “major tax cuts for workers” and eliminate taxes on tips are less clear.

Social Security benefits may be at risk

Trump has also proposed eliminating taxes on Social Security benefits. While this could provide short-term relief to those receiving SSI benefits, it would also deplete Social Security funds, hurting workers in the long run, according to the Tax Policy Center.

For anyone nearing retirement or planning in advance, experts don’t recommend relying solely on Social Security to finance your future. Instead, put part of your paycheck into one each month tax-advantaged pension plansuch as a 401(k) or an individual retirement account. New pension rules of the SAFE 2.0 law in 2025 may make it easier for you to save for your future.

Student loan forgiveness and other benefits could disappear

Based on Trump’s previous term in office and Republicans’ vocal opposition to student debt relief, experts have predicted the new administration’s plans for student loans. With Republican state leaders spearheading efforts to block forgiveness in the courts, it is unlikely that things will move forward with the Biden administration. SAVE Plan or the “Plan B” broad student loan forgiveness attempt.

Under Trump, the SAVE plan is at risk, said Elaine Rubin, a student loan and policy expert at Edvisor and a member of CNET’s expert review board.

“We do not expect the Trump administration to continue the legal battle to enforce SAVE or approve broad forgiveness,” Rubin said. If SAVE is overturned before January 20, Rubin does not think the Biden administration will have enough time to successfully appeal the decision.

Rubin advises borrowers to pay close attention to the status of their loan repayments as lawsuits progress, especially if they are not resolved before Trump takes office. She also suggests reviewing other income-driven repayment plans now, in case SAVE is discontinued.

Project 2025, a far-right, conservative blueprint, proposes ending popular forgiveness programs, abolishing the Department of Education, and privatizing student loans. Although Trump denied any connection with the proposal during his campaign, he has done so ever since named some of the contributors to the plan to prominent positions in his government. Trump has promised that too shut down the Department of Education on the campaign trailan act that would require congressional support.

Many parts of the Project 2025 program related to public education, including removing the Department of Education, are highly speculative, according to Rubin. “It’s unclear whether he will get the votes he needs to make any of these changes,” Rubin said.

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