2024 Election Implications For Tariff Policy & Tax Legislation
Republicans secured a sweep in the 2024 election, winning control of the White House and the US Senate and keeping control of the US House of Representatives. However, slim majorities in Congress—particularly in the House—will have important implications for tax legislation.
The 2024 election was a referendum on the speed of deglobalization, with President-elect Trump vowing to be much more aggressive on trade policy than Vice President Harris – particularly with regard to China. Trump has vowed to increase tariffs on China while also calling for a 10-20% tariff on all imports into the United States. Trump’s first priority is China. He wants companies to move their supply chains out of China and will increase tariffs to push them to do so. We expect Trump to issue a series of executive orders early in his administration, calling for recommendations to increase tariffs on China, though the higher tariffs may not be implemented immediately. We do not expect Trump to prioritize the implementation of 10-20% universal tariffs (and Congress would likely be needed for him to impose these, anyway). Instead, we expect Trump to use the threat of tariffs as a means of exacting concessions from the targeted countries. “Personnel is policy,” and Trump’s selections for his US Trade Representative and Treasury Secretary will be important for how aggressive his trade policy is.
Republicans sweeping in the 2024 election has two important implications for the tax legislation that Congress will take up in 2025 to extend the individual income tax cuts enacted in 2017 as part of the Tax Cuts and Jobs Act.
First, Republicans will move to pass tax legislation via the budget reconciliation process, which requires only 51 votes in the US Senate rather than the traditional 60. We expect nearly all of the expiring tax provisions to be extended, even if it requires a temporary extension. The larger issue will be how to pay for these tax cut extensions and whether new campaign promises, such as no taxes on tips and a corporate tax rate cut will be included.
Second, Republicans will only have a 2-3 seat majority in the House. Given the slim House majority, Trump’s choice of three House members, Rep. Gaetz, Rep. Waltz, and Rep. Stefanik, to serve in his administration could delay the ability of Republicans to move forward on their tax legislation, which they had hoped to complete in the first half of 2025. Gaetz has already resigned and Waltz is expected to do so in January to be in place on Day 1. House vacancies must be filled via special elections; governors cannot appoint their replacements. As a result, Republicans will have to carefully time Stefanik’s vacancy in order to protect their slim majority in the House.
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