As the United States Chief Market Intelligence Officer in 2017, I had a close-up view of Trump 1.0. and its revolving door of policy and personnel chaos. Trump 2.0 is very different. It is a well-oiled machine that had four years to prepare for his return. Heritage Foundation, Cato Institute and America First Policy Institute (and others) drove intellectual policy development with the famous Project 2025, a blueprint for today’s Trump direction. Also, his administration is full of loyalists ready to enact his vision with almost no dissent.
However, to fully understand President Trump, it’s important to provide context on how he views the world and what drives his actions.
Here are five major areas for consideration:
- Economic Leverage as a Primary Tool – Tariffs, sanctions, and trade deals take precedence over military intervention. Prefers trade wars over military wars.
- Zero-Sum Thinking – Every negotiation has a winner and a loser; alliances and multilateralism are seen as economic drains. This manifests into anti-globalist and isolationism covering trade, immigration and foreign policy.
- Personalist Diplomacy – Relationships with world leaders dictate policy direction rather than institutional frameworks. Trudeau and Merkel didn’t have good relations with Trump, but Abe did. Zelensky struggles, but Putin doesn’t.
- Disruptive and Contradictory Foreign Policy – Trump has made it clear that he views the post war international order as a liability on the United States. Trade (See #1), open borders and US defense blanket are all seen as a cost not a benefit.
- Reflexive Contrarianism – Trump instinctively opposes elite consensus, causing policy shifts that challenge traditional thinking and structures. Trump often has an end goal but doesn’t state the means on how to achieve it. Actions often create short-term shocks but aim to force long-term restructuring like reducing the size of the US government.
Let’s apply these into a few economic areas for understanding the implications and opportunities. This paper should be viewed as a thematic overview not a granular discussion of these issues.
Supply Chain Disruptions and Tariffs
Clearly, tariff uncertainty and increased trade friction with Canada, Mexico and China raises costs for materials, equipment, goods and labor-intensive services. These seem to change daily with the on again/delayed again nature of the 25% tariffs on Canada and Mexico. India’s Modi and Japan’s Ishiba appear to have good relationships with Trump and don’t appear to be in the crosshairs of US aggressive trade policy.
Overall, the tariff chaos creates margin pressures for commercial contractors and service providers reliant on global supply chains. It may create potential incentives for reshoring to the US. Strategies to overcome these hurdles include strategic acquisitions of domestic suppliers, nearshoring to mitigate long-term risk and regionalization of supply chains with trading blocs. Furthermore, as the trade war intensifies, emerging tech sectors—such as AI and semiconductors—are forced to reexamine their supply chains, reflecting broader shifts in global competition.
The tariffs are already disrupting key industries. For instance, Reuters recently reported that automakers such as Ford and GM are experiencing supply chain disruptions due to new tariffs on steel and aluminum imports from Canada and Mexico. On the technology side, companies like Apple and Nvidia are contending with component shortages that are driving up manufacturing costs and potentially delaying product launches. These are clear indications that the tariffs are not merely a policy announcement—they are causing tangible cost increases and operational challenges across critical sectors.
Labor Market and Immigration Policies
The stricter immigration enforcement impacts the availability of skilled and semi-skilled labor in the United States. The recent flood of undocumented workers into the country helped the economy overcome the 12 million job openings in 2022 and upward pressure on wages. Since 2024, US border crossings have dropped significantly, and Trump’s policies will continue this trend. For the tech industry, the H-1B visa program might be under scrutiny with the Department of Justice stating immigration enforcement will be its top prosecution priority.
Data projections from the U.S Bureau of Labour Statistics indicate that by 2030, the U.S. economy will add roughly 11.9 million jobs, bringing total employment to about 165.4 million. However, due to an aging population and slower growth in the civilian noninstitutional population, labor force growth and participation are expected to decline—shaping overall aggregate demand, industry output, and employment patterns.
The graph below points out the key issue.
Here’s what the CBO says in its report: “In CBO’s projections, the rate of population growth generally slows over the next 30 years, from an average of 0.4 percent a year between 2025 and 2035 to an average of 0.1 percent a year between 2036 and 2055. Net immigration becomes an increasingly important source of population growth. Without immigration, the population would shrink beginning in 2033, in part because fertility rates are projected to remain too low for a generation to replace itself.”
Industries most impacted will be agriculture, construction, and healthcare, which rely heavily on foreign-born workers. Additionally, a decline in H-1B visas could impact innovation and competitiveness in AI and semiconductor industries, further intensifying geopolitical tensions with China.
If the US economy continues to grow and baby boomers continue to retire, this restrictive US policy will likely create labor shortages in janitorial, landscaping, and specialty contracting industries. It will also create shortages in warehouses, auto production and food (rendering plants). This will drive demand for increased automation, AI and workforce development initiatives to enhance productivity and efficiency. And, ironically, drive demand for high tech workers from the H1-B visa programs.
Structure of US government, debt & deficits
The US debt and deficit have grown dramatically since the Bush (43) administration and increased significantly under both Trump (TCJA) and Biden (IIJA, IRA, Chips and Science, ARP) due to tax cuts and COVID spending. US debt is now over $33 trillion and the country is running yearly deficits of $2 trillion. President Trump’s tax policies would add another $7.5 trillion to the debt total. Currently, Congress is moving a tax cut bill to achieve his goals but it’s uncertain over how far they will add to the deficit spending. In turn, this drives a need to reduce the overall size of the US government.
To this end, the Elon Musk-led Department of Government Efficiency or DOGE is attempting to “Twitterize” (cut staff significantly) the US government. Musk has stated there are now DOGE staff in every US agency and department. The stated goal is to reduce the inefficiencies, redundancies and waste. The table below outlines DOGE’s plans.
For example, USAID, CFPB and the Department of Education are clearly reduction targets. Remember, there are 392 agencies, including 15 executive departments, 66 independent agencies, and various boards, commissions, and committees. Trump’s goal is to capitalize on the rapid changes Musk is enacting to force necessary changes in government and the economy.
Fiscal Challenges and Economic Uncertainty
The combination of a persistent debt/deficit challenge and volatile tariff policies—with their attendant inflationary pressures—has made the Federal Reserve cautious about cutting interest rates. As a result, capital costs are expected to remain elevated for an extended period, increasing uncertainty around profit margins and overall expenses. This environment dampens future growth prospects and leads companies to scale back on capital investments, which in turn forces reductions in labor and creates caution in earnings forecasts. This domino effect is already underway.
For example, the Congressional Budget Office recently forecast that the U.S. budget deficit will remain around $1.9 trillion in fiscal 2025 (roughly 6.2% of GDP), with cumulative deficits projected to near $21.8 trillion from 2026 to 2035 if current policies persist. At the same time, recent Bureau of Labor Statistics data show that the labor market remains tight, with approximately 7.74 million job openings and an unemployment rate steady around 4.1–4.2% as of January 2025. Moreover, analyses by Federal Reserve economists reveal that disruptions in the trade of intermediate goods can have lasting inflationary effects—a 10 percentage point shock in trade costs is associated with about a 0.3 percentage point increase in CPI inflation during the first year.
If tariffs are delayed or reduced, inflationary pressures could ease, leading to a more accommodative Federal Reserve stance. Conversely, prolonged trade tensions could prompt retaliatory tariffs from China and the EU, further exacerbating cost pressures. Monitoring Congressional dynamics and international responses will be key for businesses to assess potential risks and opportunities.
Final Thoughts
Trump 2.0 represents a fundamental shift in execution compared to his first term. The seemingly chaotic nature of the Trump administration is causing allies, stock markets and companies to rethink relationships. Whether through tariffs, immigration enforcement, or government downsizing, the administration’s policies are set to create significant ripple effects across the economy, reshaping supply chains, labor markets, and fiscal policy.
However, these measures may encounter significant resistance; Congressional pushback, legal challenges, or international retaliation could derail the planned course, leading to outcomes that diverge sharply from expectations. For instance, if tariff implementations are delayed, companies may adjust their supply chain strategies in unexpected ways, potentially shifting production timelines or sourcing from alternative markets. Similarly, if unforeseen labor shortages force policy adjustments, such as modifying immigration or workforce development initiatives, the resulting shifts could further complicate the economic landscape.
Bottom line: Businesses that can understand the administration’s priorities and adapt accordingly, will be in the best position to navigate the uncertainty and leverage emerging opportunities.
