With Donald Trump winning his second term, Republicans securing a majority in the Senate and on their way to securing a majority in the House of Representatives, corporations and investors are assessing expected policy shifts. The Trump Administration’s renewed “America First” approach promises familiar themes: tax cuts, deregulation, and trade protectionism, aiming to bolster domestic industries. Against a backdrop of inflationary pressures, labor constraints, and supply chain issues, businesses are strategizing to adapt to these complex economic conditions, and market reaction on the heels of Election Day suggest renewed optimism in the direction of the economy, M&A environment, and decreased regulatory framework.

In the white paper below, we explore the expected impact of Trump’s policies on M&A and regulatory frameworks, supported by a Republican-controlled Senate and, likely, Republican House. It examines how the potential Republican majority is anticipated to bolster the legislative and regulatory agendas aligned with the Administration’s priorities over the next two years.

Market Impact

The Trump/Vance Administration is expected to prioritize tax cuts for individuals and corporations, deregulation, and trade protectionism. Unlike the previous Trump Administration, which saw elevated federal spending in response to the COVID-19 pandemic, the new approach suggests a reduced spending footprint. This strategy aims to stimulate growth through tax relief and regulatory easing, potentially impacting the federal deficit depending on revenue performance. A Republican-controlled senate, and likely the House, is expected to support these pro-business policies, promoting reduced corporate taxes, minimized regulatory barriers, and increased energy production to stimulate private-sector investment and expansion.

Additional areas of market impact that Sloane explores in this white paper:

• Corporate and individual tax cuts
• Deficit and debt considerations
• Revenue generation measures

Investors are optimistic about potential tax cuts and deregulation, particularly in sectors like energy, financial services, and manufacturing. However, these policies may also introduce inflationary pressures, especially if government spending cuts are implemented gradually.

Trade Policy

The Trump/Vance Administration’s “America First” trade strategy centers on protecting U.S. industries and encouraging domestic production, with a heavy reliance on tariffs as a negotiation tool. Previously, the Trump Administration renegotiated NAFTA with the United States-Mexico-Canada Agreement (USMCA) and applied tariffs on Chinese imports. President Trump is expected to expand these policies, furthering the focus on reshoring jobs and bolstering U.S. manufacturing. A potential Republican-led Congress will likely adopt a notably aggressive trade stance, emphasizing broad tariffs, renegotiated trade deals, and incentives aimed at reshoring manufacturing to the U.S. The 2024 Republican platform, shaped heavily by Donald Trump’s economic agenda, signals a move away from traditional free-market policies in favor of protectionist measures. This includes proposals for baseline tariffs on foreign goods, reciprocal tariffs with trade partners, and restrictions on Chinese investment in U.S. industries. The primary focus is on protecting strategic industries and reducing reliance on foreign supply chains, which could bolster sectors like defense, technology, and manufacturing.

Trade restrictions, particularly those involving China, may diminish the appeal of cross-border mergers and acquisitions for firms with exposure to Chinese markets due to uncertainties around tariffs and regulatory barriers. Technology and manufacturing sectors, which often rely on global supply chains, could face significant challenges in navigating these changes. Conversely, domestic manufacturing and energy sectors are likely to see increased M&A activity as companies localize their supply chains and capitalize on incentives for domestic production. Firms with established North American supply chains may gain strategic advantages in this localized environment, making them attractive acquisition targets. Additionally, industries aligned with national security interests, such as defense and semiconductors, could benefit from a favorable M&A climate and expansion opportunities. Renewed attention on simplifying ex-U.S. capital flows may also allow multinational corporations to re-shore foreign earnings, bolstering domestic M&A resources.

Regulatory Environment

The Trump/Vance Administration, along with a Republican led Senate and House, is expected to focus on deregulation in key sectors. This white paper explores potential regulatory impacts in the following sectors:

• Energy: The Trump/Vance Administration is expected to pursue extensive regulatory rollbacks in the energy sector, favoring fossil fuels over renewable energy initiatives. President Trump’s emphasis on “energy dominance” involves removing the U.S. from the Paris Agreement, expanding oil and gas drilling, and reducing energy-related compliance burdens. Legislation under a Republican Congress is expected to advance the Trump Administration’s ideals, easing environmental regulations and offering incentives for fossil fuel production. This approach could slow the growth of renewable energy investments while providing immediate gains for the oil, gas, and coal industries.
• Financial Services: Deregulatory efforts in financial services under the Trump Administration are anticipated to focus on reducing compliance burdens for banks and investment firms, potentially reshaping key regulatory bodies. President Trump has pledged to replace current financial regulatory heads, aiming to shift the regulatory stance to favor reduced oversight, limit rulemaking on capital and liquidity requirements, and ease compliance constraints on financial institutions. This would likely stimulate domestic consolidation, increase lending, and enhance access to capital, creating a more favorable environment for mergers and acquisitions and benefiting institutions positioned to leverage a streamlined regulatory framework.
• Healthcare & Pharmaceuticals: The Trump/Vance Administration is expected to reshape healthcare policy by reducing regulatory constraints on pharmaceutical pricing and easing market entry requirements, fostering increased investment in research and development. Congressional Republicans are likely to support these efforts through legislative initiatives aimed at deregulation and market-driven healthcare reforms.
• Emerging Industries: The Administration plans to “reduce barriers to innovation” in emerging industries, including cryptocurrency, artificial intelligence, and commercial space travel, while also incentivizing advanced manufacturing through measures like expanded R&D tax credits and offering federal land for factories. By relaxing regulatory oversight across these high-growth sectors and reshaping incentives for U.S.-based production, the Administration aims to boost domestic innovation and create conditions favorable for investment and expansion.

Preparing for 2025 and Beyond

With the Trump/Vance Administration and a unified Republican Senate, and likely the House, gearing up for inauguration, companies will need to navigate regulatory shifts, economic changes, and labor policies that influence corporate strategy in the years ahead. Staying informed of these developments allows businesses to adapt and thrive. Sloane & Company is here to provide strategic communications support tailored to the evolving needs of your business and stakeholders in this dynamic environment.

In times of political, social and economic unpredictability, companies and executives need a clear and consistent plan and message. Sloane & Company is here to help you achieve those objectives, tailored to the needs of your business and stakeholders.