As the 2024 presidential election approaches, an economic question everyone needs to answer is: Can a deregulatory policy agenda under a potential second Trump administration boost economic activity?
While both candidates face constraints on further fiscal expansion, former President Trump has called for deregulation to boost domestic growth.
On the other hand, President Biden’s policies supporting the environment and workers’ rights have burdened large corporations.
Certainly, Trump’s first term focused on reducing regulatory complexity to simplify the ease of doing business. While agencies such as executive branch budgets and restrictive language in the Code of Federal Regulations have not changed significantly, significant deregulatory actions targeted environmental, energy, financial, and net neutrality regulations in his previous term.
In contrast, the Trump administration has increased some restrictions, such as those on the prices of prescription drugs and nicotine products.
In a second term, Trump is likely to prioritize easing regulatory hurdles to oil and gas development, expanding exports of liquefied natural gas, and lifting limits on greenhouse gas emissions. The regulatory environment for health care may see less change, given Trump’s previous efforts to regulate drug prices.
Analysts expected financial regulation to change under Trump, with consumer finance regulations likely to change more quickly than capital and liquidity requirements. Antitrust enforcement is likely to ease somewhat, they noted, though major issues in the technology sector are likely to persist.
Sectors that could benefit from market liberalization have already seen relative strength in the stock market in the wake of the presidential debate. Companies in regulation-intensive industries such as gaming and capital markets outperformed others, suggesting market optimism about the market liberalization agenda.
While academic studies suggest that deregulation would boost activity, the impact of Trump’s trade liberalization measures during his first term has been limited at the macroeconomic level, analysts say.
Thus, although the deregulation agenda may benefit specific industries, its overall impact on economic growth remains uncertain.
