Republican sweep: What it means for business
While key economic indicators are providing some optimism about the economic outlook, forecasts and US macroeconomic data have been all over the map in the months leading up to the election. Some worries about the labor market eased after September’s jobs report came in higher than expected, but the manufacturing sector continues to contract. This economic volatility and a tense geopolitical landscape add to the uncertainty around the election, just days before voters go to the polls.
If Republicans maintain control of the House and gain control of the Senate, a President Donald Trump would be able to push some of the most ambitious parts of his policy agenda. This could include corporate tax cuts and a wave of new tariffs.
A sweep would be a relative surprise to many business leaders. In our October 2024 Pulse Survey, 76% of the US executives responding agreed or strongly agreed there would be a divided government after the election. In addition, 77% expected an increase in executive orders and 75% expected both more regulation and litigation, regardless of who won.
A Republican sweep could reshape leadership agendas at most US companies. Trump campaigned on promises of tax cuts and tariff increases. Regarding tax cuts, he has called for making permanent expiring TJCA individual income tax and estate tax provisions. The Republican party platform also calls for maintaining TCJA business provisions and pursuing additional tax cuts. Trump has proposed lowering the 21% corporate income tax rate to 15% for companies producing goods in the United States. A Republican-controlled Congress in 2025 could use budget reconciliation to bypass the Senate’s 60-vote threshold for tax legislation, but it still must follow rules such as avoiding long-term deficit increases.
Trump has also proposed increasing federal revenues with a baseline tariff of at least 10% on all foreign-made goods and a 60% tariff on imports from China. With an aligned Congress, Trump has significant power in terms of levying new tariffs and trade sanctions, which could hurt US competitiveness. Seventy-five percent of executives in our survey agreed or strongly agreed that a 10% universal tariff on imports would significantly hinder their growth. Even a modest 10% tariff on key categories like autos could push companies to revamp their supply chains. Moreover, the main burden will fall on consumers, as companies generally often pass tariffs along in the form of higher prices.
Republican control of the White House and Congress opens the door to extensive reversal of the Biden administration’s agenda. However, given the tight margins within Congress, Republicans will likely need to overcome intraparty tensions to pass their new agenda. The resulting outlook for policy and regulation is a sea change for companies, many of which are only beginning to grasp the implications for their strategy and operations. Regardless of who’s president, 75% of executives in our October 2024 Pulse Survey anticipate both more business litigation and regulation, and 77% said the same about executive orders (EOs).
Under a Trump administration, executives in our survey said economic policy, foreign relations, the antitrust/competition environment and technology, AI and data regulation are among the top policy risks to their company. The GOP-controlled Congress could fast-track certain policies, particularly in areas with potential bipartisan support: China, national security, industrial policy and supply chains, trade, energy independence, privacy and cybersecurity. In many cases, the parties agree on the high-level objectives but not necessarily the means to get there. Finding bipartisan, filibuster-proof consensus on legislation will require considerable effort and pressure from stakeholders.
Another check on White House policy will be the Supreme Court’s repeal of the Chevron doctrine, as well as other recent decisions that limit the powers of regulatory agencies. And to the extent that they’re not preempted by federal legislation, the states will likely continue to assert themselves in key policy areas like climate, AI, privacy and tech regulation, as well as reproductive rights. Executives ranked state governments as affecting their company more directly than any branch of the federal government.
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The Republican Party’s control of both the White House and Congress may come as a surprise to the financial services executives who in our October 2024 Pulse Survey expected a divided government (82% versus 76% for all respondents).
A Republican sweep could open the door to an extensive reversal of the Biden administration’s agenda. Trump may move quickly to replace the heads of the Consumer Financial Protection Bureau and the SEC and the US Attorney General who leads the Department of Justice.
FS executives may be reassessing their acquisition and divestiture plans in light of what a GOP sweep could mean for antitrust reviews. Federal antitrust regulators will likely be less active under Trump. But that doesn’t mean they’ll be inactive. Some members of the Republican Party are more hawkish on regulation in some sectors than in the past. In our survey, 84% of FS executives said the election outcome will affect, either somewhat or to a great extent, their company’s business decisions about deals. On the other hand, 72% of FS executives in our survey said President-elect Trump’s proposed 10% universal tariff on imports would significantly hinder their growth.
Regardless of the election outcome, FS executives are still focusing on technology modernization and have indicated plans to continue investing. Technology will likely remain a perennially big budget item in FS considering its potential efficiency gains through hyperautomation as well as its possible boost to competitiveness, compliance and growth.
The election’s outcome also wasn’t going to change expectations for more rules. Roughly three-quarters of FS executives said they anticipate more regulation (76%) and executive orders (72%) no matter who wins.
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With Donald Trump capturing the White House and Republicans securing majorities in both the Senate and the House, Republicans would be in a strong position to push forward several healthcare policy priorities. This consolidation of power may enable the party to implement its vision of creating a more competitive market through fewer regulatory requirements of health industries.
Looking to the future, Trump would have the opportunity to zero in on the key priorities detailed during his campaign. Among these priorities is the reorientation of artificial intelligence (AI) oversight toward a model that emphasizes self-regulation and a shift toward reinstating his prior deregulation policies as well as strengthening Medicare by safeguarding its finances. Trump can collaborate with Congress to privatize certain aspects of the Veterans Affairs system and he plans to expand access to primary care and age-in-place services, which enable seniors to remain in their homes.
Furthermore, Trump has emphasized that states have the freedom to enact their own abortion laws and that his administration will oppose late-term abortions, while also broadening access to IVF and embryo freezing.
He may also prioritize boosting domestic production and confirming that the US becomes independent in the supply of essential goods such as pharmaceuticals, medical equipment, and critical raw materials, to reduce reliance on imports and enhance national security.
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With a second Donald Trump term and a Republican Congress a possibility, technology, media and telecom (TMT) executives are preparing for protectionist trade measures and shifting US foreign relations, both of which could raise costs for inputs and for customers. In our October 2024 Pulse Survey, 75% of executives said a 10% universal tariff on imports would significantly hinder their growth.
A Trump administration would likely push for lower corporate tax rates and tariff increases across the board. His aggressive stance on trade remains a key concern for executives, 74% of whom said the 2024 election outcome would affect their trade decisions either somewhat or to a great extent. Trump has promised to impose substantial tariff increases on products from China and Mexico, especially origin vehicles and key goods. Imports from other countries will face standard tariffs of 10% to 20%. The United States-Mexico-Canada Agreement (USMCA) is another area where trade could be reshaped. Companies should consider adjusting their sourcing strategies to mitigate potential disruptions, particularly in the semiconductor space, where national security concerns and tariffs have already led to shifts in investment and manufacturing.
Executives also see opportunity under Trump, with 53% responding to our survey saying that they'd increase artificial intelligence (AI) investment if he won. The expanding AI sector stands to benefit from Trump’s deregulation policies and pro-business stance, including his 2019 executive order that launched the American AI Initiative advocating for more federal investment in the technology.
Regulatory pressures would remain a key challenge for the TMT sector, however. As both parties focus on national security, oversight would likely increase, especially around cybersecurity. The sector should prepare for an increasingly litigious business environment, with antitrust cases and regulatory requirements expected to intensify. While a Trump administration may deprioritize domestic sustainability regulations, Europe’s focus on carbon emissions is likely to push TMT companies to continue investing in sustainability to comply with global standards.
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A Donald Trump presidency and Republican Congress would likely mean less regulation overall and an attempt to alleviate burdens on the private sector. In his first term, Trump steered clear of heavy legislative action as he focused on strengthening cybersecurity through military engagement. In fact, there could be momentum to initiate a Department of Defense Cyber Force as a dedicated branch of the armed forces. This is in contrast with how the Biden administration operated, which relied more on tighter regulations and holistic inter-agency coordination.
A Trump administration would be likely to place more emphasis on the national defense strategy. It would probably also lean more on the courts and limit the powers of regulatory agencies, following the Supreme Court’s repeal of the Chevron doctrine and other recent decisions.
Harmonization of cyber disclosures had been a key focus under the Biden/Harris administration. For instance, Congress mandated reporting harmonization under the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA). CISA’s proposed rule to implement reporting requirements under CIRCIA established harmonization approaches that are not yet in practice. In contrast, the Trump administration will likely focus on eliminating what it perceives as overly burdensome regulations and limiting which entities qualify as critical infrastructure.
On the national threat landscape, overall focus on threat intelligence sharing was less of a priority under Trump’s first term. It’s unclear exactly how Trump would approach this going forward although threat vulnerability detection and response are likely to be priorities.
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A Republican Congress would likely prioritize Donald Trump's tax policy if he becomes president, especially with key individual provisions of the 2017 Tax Cuts and Jobs Act (TCJA) expiring at the end of 2025 and several significant business tax provisions set to change.
On the campaign trail, former President Trump has called for making permanent expiring TJCA individual income tax and estate tax provisions, and the Republican party platform calls for maintaining TCJA business provisions and pursuing additional tax cuts. Trump has also proposed lowering the 21% corporate income tax rate to 15% for companies producing goods in the US.
He has said that his tax proposals would be offset by the increased economic growth they would generate. He has also proposed increasing federal revenues with a baseline tariff of at least 10% on all foreign-made goods and a 60% tariff on imports from China.
A Republican-controlled Congress makes it possible to apply budget reconciliation procedures and avoid the 60-vote threshold needed in the Senate to advance tax legislation in 2025. A bill must comply with several requirements, including a key prohibition against a reconciliation measure increasing federal deficits outside the period covered by a budget resolution. Senate rules also prohibit using reconciliation to change Social Security laws.
The Republican work product TCJA was enacted in 2017 using budget reconciliation procedures. The December 31, 2025, sunset of individual tax provisions and other scheduled changes to business provisions were adopted to comply with these reconciliation requirements.
A 2025 tax bill considered under reconciliation would be subject to the same requirements to sunset provisions that increase federal deficits in future decades. That means the TCJA individual provisions could be extended to a new sunset date under reconciliation procedures but could not be made permanent unless their cost is covered by other revenue increases or spending reductions.
Debt and deficit considerations will be top of mind for the next Congress. As debt concerns mount, the fiscal cliff becomes steeper, leaving Congress to look elsewhere for revenue. A Republican-controlled Congress can be expected to respond to these fiscal concerns. Business leaders will need to evaluate the potential effect of any proposed tax policies on US economic growth and opportunities for US households should the TJCA extend or expire. The Congressional Budget Office (CBO) projects in 2025 the federal budget deficit to exceed $1.9 trillion and interest will be $1 trillion. By contrast, in 2017, when TCJA was enacted, the deficit was $665.7 billion and interest was under $300 billion.
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How fast and how far would a second Trump administration extend the US protectionist stance established in 2018-19 with tariff hikes on Chinese imports (and left largely unchallenged during the Biden presidency)? These are key considerations for US business. Former President Donald Trump has placed tax and trade policy — specifically tariffs — at the center of an economic agenda to raise federal revenue, protect American jobs and promote reindustrialization.
How fast? Trump has signaled intentions to use tariffs to jolt US relations with close trade partners and economic competitors alike. He’s offering a carrot-and-stick approach, with a proposed 15% corporate tax rate as an incentive for domestic manufacturing alongside an across-the-board tariff of potentially 10% or more on imports to spur domestic production activities. He has also proposed a 60% tariff on imports from China.
While the specifics behind Trump’s implementation plan for increasing tariffs were lacking during the campaign, the headline figure — 10-20% of all imports, if executed as proposed, which could extend to imports from Mexico in a maquiladora structure — could have significant effects on multinationals.
How far? By renegotiating NAFTA to create the United States-Mexico-Canada Agreement (USMCA) during his first term with a provision that the agreement must be reviewed in six years, Trump has shown a willingness to revisit long-standing trade arrangements. He’s tied US trade policy to national economic goals. With the USMCA up for review in 2026, the administration is likely to introduce priorities on trade with Canada and Mexico over the next year. Separately, his campaign indicated his aim to continue along some of the Biden administration trade policy trajectory. One example would be raising substantive barriers to importing Chinese electric vehicles.
A president can impose tariffs under many conditions, including unfair trade practices, without Congress. Unified party control could signal fewer challenges or delays in implementing Trump’s foreign trade agenda. Congress nonetheless may push for certain provisions as part of its role in monitoring and oversight of US trade arrangements, for example, during the USMCA review period.
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The message from executives ahead of the elections was clear: It would be full steam ahead on artificial intelligence (AI), no matter who won. In PwC’s October 2024 Pulse survey, 53% said a Donald Trump victory would lead to increased AI investments. Fifty-two percent said the same about a Kamala Harris victory. In both scenarios, only 5% said AI investments would decrease. Since AI will be a foundational technology, like the internet — intrinsic to everything companies do — it’s bigger than any election. The technology will keep advancing. The value it creates for business will keep multiplying too.
But this election mattered. Former President Trump and the Republican Party have indicated a lighter touch toward regulating technology, including a promise to repeal President Biden’s executive order on AI. It’s unlikely that a strict regulatory framework, such as the European Union’s AI Act, will emerge from this Congress or administration. A lighter touch might please both technology company leaders and CIOs.
The new administration and Congress could also affect critical elements of the AI supply chain – energy and computational power. The systems that support AI and cloud require vast and growing amounts of electricity. While the Biden administration sought to advance renewable energy initiatives, a Trump administration might take a more hands-off approach. Many AI-related systems also depend on a global supply chain, which could suffer if trade tensions rise.
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A second Trump administration would likely look a lot like the first one. We may see a repeat performance with a strong focus on traditional energy sectors, domestic energy production and a significant rollback of Biden-era climate policies.
During his first term, Donald Trump eliminated more than 100 environmental regulations, including wetland protections, mercury emission restrictions and carbon dioxide limits. He’s also proposed tariff increases, which would likely impact global supply chains and trade.
What remains to be seen is what will become of the Inflation Reduction Act, a significant legislative achievement of the Biden administration that provides hundreds of billions of dollars in tax incentives for initiatives that reduce greenhouse gas emissions. Repealing the law may stall related capital projects, but that would require support from Republicans in Congress, many of whom have seen the benefits of the law in their home states. Trump may also curb automobile electrification efforts.
Given this backdrop, regulatory uncertainty looms large. Executives responding to our October 2024 Pulse Survey ranked US trade, economic policy and regulatory oversight among their top policy risks under a Trump presidency. Nearly half (46%) of the respondents said they’d increase sustainability investments if Trump returns to office while 11% say they will decrease investment. Companies may be investing more in sustainability regardless of the regulatory backdrop because it helps meet growing consumer demand for sustainable products, manage environmental risks and comply with sustainability disclosure regulations in key international markets.
Trump is also expected to challenge environmental, social and governance (ESG) investing. He may revive an executive order making it harder for employers to offer ESG-focused mutual funds in corporate retirement plans.
Regardless of the election outcome, business leaders should continue to consider sustainability risks and opportunities across their operations, products, supply chains and business models to address the threats to their long-term strategies as well as potential areas of growth.
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A Republican sweep of the presidency and both houses of Congress would likely give Donald Trump an easier time enacting his agenda. Federal antitrust regulators would likely be less active under Trump as well, but that doesn’t mean they’d be completely inactive. Some members of the Republican Party are more hawkish on regulation in some sectors, such as Big Tech, than in the past. The Federal Trade Commission (FTC) may have to adjust its regulatory priorities with a Republican chair, but he or she wouldn’t be able to change the agency’s overall direction right away. Any major changes would likely impact highly regulated sectors and industries, including pharmaceuticals, biotech and air travel.
The FTC and Justice Department under President Biden had been pursuing cases to crack down on a range of activities they view as anticompetitive as they seek to broaden longstanding antitrust case law. Knowing that regulators are unlikely to continue these efforts long term may spur more dealmaking in the short term.
Regulators in the departments of Justice, Treasury and Commerce, among others, have gotten more involved in reviewing and restricting international deals. A broad US political consensus that viewed globalization and increasing free trade as generally positive began to unravel in the 2010s. More populist initiatives, including a renewed focus on industrial policy, have added new wrinkles to cross-border M&A. International deals aren’t dead by any means, but they have gotten more complicated.
Trump has proposed higher tariffs on imports. If enacted, this would likely impact the US deals market by altering the cost structure of companies reliant on imported inputs. Higher tariffs increase operating costs, reducing profit margins and making these businesses less attractive to potential buyers. Companies facing increased expenses also have reduced cash flow, limiting their ability to finance deals.
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