With the impending 2024 presidential election, an economic question that everyone needs an answer to: Could a deregulatory policy agenda under a potential second Trump administration boost economic activity?
With both candidates facing constraints on further fiscal expansion, former President Trump has advocated for deregulation to give push to domestic growth.
On the other hand, President Biden’s policies favoring the environment and workers' rights have burdened large corporations.
To be sure, Trump's first term had focused on reducing regulatory complexities to simplify the ease of doing business. Although proxies like executive agency budgets and restrictive words in the Code of Federal Regulations did not substantially change, important deregulatory actions targeted environmental and energy regulations, financial regulations, and net neutrality in his previous term.
On the contrary, Trump's administration increased some restrictions, such as those on drug prices and nicotine products.
A second Trump term would likely prioritize easing regulatory hurdles for oil and gas development, expanding LNG exports, and reversing restrictions on greenhouse gas emissions. The regulatory environment for healthcare might see fewer changes, given Trump's past efforts to regulate drug prices.
Analysts predicted that financial regulation could shift under Trump’s presidency, with consumer finance regulations possibly changing more quickly than capital and liquidity requirements. In all likelihood, antitrust enforcement might ease slightly, though major tech sector cases would likely continue, they noted.
Sectors that could benefit from deregulation are already seeing relative strength in the equity market following the presidential debate. Companies within regulation-heavy industries like gaming and capital markets outperformed, indicating market optimism about a deregulatory agenda.
While academic studies suggest that reduced regulation could boost activity, the impact of Trump's first-term deregulation was limited at a macroeconomic level, according to analysts.
Thus, while a deregulatory agenda may benefit specific industries, its overall effect on economic growth remains uncertain.