On the campaign trail, President Donald Trump promised lower taxes, lower prices and a stronger economy in his second term.
On day one of his second term, Trump signed a flurry of executive orders — including a regulatory freeze pending an administration review and a directive to members of his administration to assess trade relationships with Canada and China and Mexico — to try and move some of his goals forward. But delivering on those and other promises will take additional steps, and in many cases, the support of Congress.
Here are five ways a second Trump administration could impact your finances.
The White House did not immediately respond to requests from CNBC for comment.
1.Tariffs could send prices higher
During the campaign, Trump promised a 10% across-the-board tariff on all imports, a 25% tariff on all goods from Mexico and Canada, and a tariff of up to 60% on products from China. Trump’s day one order to assess trade relationships puts an April 1 deadline on the first of those reviews.
“We view Trump’s decision against announcing new tariffs on his first day in office as evidence of the ongoing internal debate over how best to implement the duties, not as a sign of plans to significantly scale back or withdraw his campaign pledges to impose new duties on foreign goods,” Beacon Policy Advisors wrote in a research note.
During his confirmation hearing last week, Trump’s pick for Treasury secretary, Scott Bessent, told lawmakers to think about tariffs in three ways: as a remedy for unfair trade practices, a revenue raiser and a negotiating tool. He pushed back on Democrats who said tariffs will mean higher prices for consumers.
“China, which is trying to export their way out of their current economic malaise, will continue cutting prices to maintain market share,” Bessent said.
2. Tax rates and deductions may change
Unless Congress takes action, trillions of tax breaks are scheduled to expire at the end of the year, including lower tax brackets. More than 60% of taxpayers could see higher taxes in 2026 without extensions of provisions in the Tax Cuts and Jobs Act, or TCJA, according to the Tax Foundation.
Extending those provisions is a heavy lift amid concerns over ballooning federal debt. According to the Congressional Budget Office, the federal budget deficit is expected to rise to $1.9 trillion this year, adding more onto the $36.2 trillion in outstanding debt.
TCJA provisions will cost an estimated $4 trillion dollars over the next 10 years, according to a budget model by Penn Wharton. Trump also promised to eliminate taxes on tips and Social Security, which would drive the price tag exponentially higher. That puts a lot up for negotiation as lawmakers debate spending and taxes this year.
“Fiscal pressures are going to weigh harder on the debate than they did the first time around,” Erica York, a senior economist and research director at the Tax Foundation, said at CNBC’s Financial Advisor Summit in December.
Experts predict one of the key battles will be over the state and local tax deduction, also known as SALT. Under current law those deductions are now capped at $10,000. High-tax states like California, New York and New Jersey all have top tax rates above 10%, so changes there would be meaningful for many taxpayers who itemize deductions. Putting that cap in place freed up an estimated $100 billion a year in the federal budget, helping offset other cuts.
The maximum child tax credit was also doubled under the TCJA, from $1,000 to $2,000. On the campaign trail, Vice President JD Vance said he wants to increase the credit to $5,000. Trump has said he supports the credit, but has not specified an amount. Both are costly in budget terms.
3. Health-care costs may increase
To keep Trump’s campaign promise to protect Social Security and Medicare, cuts to other health-care programs become a way to fund tax proposals. House Republican lawmakers have identified $2.3 trillion in cuts to Medicaid, according to a document made public by Politico.
Subsidies to lower the cost of health insurance under the Affordable Care Act are also at risk. Without an extension by Congress, the subsides expire at end of 2025. Some individuals could see their premiums significantly increase. Because policy changes under the budget reconciliation process are limited, some analysts expect those subsidies to run out.
“It’s unfortunate because there are any number of compromises that could be crafted to better target the subsidies in exchange for extending them and stabilizing the market,” said Kim Monk, a partner at Capital Alpha Partners.
4. Credit card rates could move lower
People with credit card balances could benefit if Trump makes good on his proposal for a temporary 10% cap on credit card interest rates. Sen. Bernie Sanders, I-Vt., said on Thursday he was drafting legislation to do exactly that. The catch: If enacted, experts say, it could also make it harder for people to get credit.
While analysts say a cap is unlikely, the attention to the issue puts it on the watch list.
“It means there is risk that Trump could intervene with credit card policy even if it is not a draconian interest rate cap,” said Jaret Seiberg, a financial policy analyst at TD Cowen.
5. Markets may be more volatile
Traders work on the New York Stock Exchange (NYSE) floor in New York City.
Spencer Platt | Getty Images
With so many policy changes expected and so much uncertainty with how they will unfold, experts predict that markets could be volatile.
“This first year here, 2025, it’s going to be super volatile,” said Dan Casey, an investment advisor at Bridgeriver Advisors in Bloomfield Hills, Michigan.
The key for individuals is to understand their personal financial situation so they don’t have to sell if the market is down.
“It’s knowing your numbers and whatever money you have in the market,” Casey said.
For long-term goals like retirement, he said, “hold your nose and not open up the statements for a while, because it can get that ugly.”
Clarification: This article has been updated to clarify that April 1 is the deadline for the first reviews to assess trade relationships.
