Trump Presidency: 7 Ways It Could Affect You As a Consumer
Donald Trump is going to be the President of the United States? Commander-in-Chief? Leader of the Free World?
Yes, we are all still trying to come to grips with what that actually means. What does it mean for civil rights? What does it mean for our country’s diplomatic relationships and military engagements throughout the world? What does it mean for our economy or for you and me as consumers? And (most importantly) will he continue to refer to himself in third-person?
For some, the reality of a Trump presidency triggers visions of a fascist empire where anyone who is different or “other” is cast out or incarcerated. These people have responded with protests and riots in major cities throughout the country and panicked rants on Twitter.
For others, a Trump presidency represents a welcome break from “business as usual” in our nation’s capitol and a chance for upheaval in the halls of power and for the silent majority to be heard.
Still other people are taking a “wait-and-see” approach: a Trump presidency could go in many different ways, depending on which stances he holds to and which ones he pivots on.
Fortunately, even with the election not even a week behind us — and while many questions are still far from answers — we are starting to see some signs of how a Trump presidency will affect our experiences as American consumers. Some of these are quite positives, while others might be less so.
Based on president-elect Donald Trump’s actions and words so far, here are the seven biggest ways your experience as an American consumer might change in the next four years:
1. Worse customer service at government agencies (at first)
Trump has already promised that, in his first 100 days in office, he will implement “a hiring freeze on all federal employees to reduce federal workforce through attrition (exempting military, public safety, and public health).” The premise here is that the federal government is a bloated bureaucracy that needs to be placed on a diet, as it were. By imposing a hiring freeze, federal operations would adapt to operate more efficiently and spend less in revenues — or so goes his reasoning.
Could he actually do such a thing? Absolutely. As president, he will be the CEO of the federal government. Whether he does or not will largely depend on his conversations with heads of federal agencies as he learns the ropes.
If he does follow through with this pledge, every federal agency will eventually be operating on less manpower. At the beginning, at least, in the midst of this upheaval, customer service at federal agencies — which, let’s face it, is already iconically bad — will get even worse. So if you are thinking of getting a passport for a trip in 2017, for instance, you might want to take care of that before Inauguration Day.
2. Lower prices at the gas pump
Also among Trump’s goals for his first 100 days in office is this huge bone which he threw to the energy sector:
“I will lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal…[and] lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward.”
You can argue the negative environmental impacts of this course of action, but it will also undoubtedly result in cheaper gas, oil, and coal for Americans. It might also reduce fluctuations in the price of oil due to instability in the region.
The only exception to this would be if Middle East oil producers — who are known for their ability to produce and sell oil cheaper — were turned off by ramped up U.S.-produced oil and decided to back out of the U.S. market altogether. In this case gas and energy prices would jump up.
3. Lower insurance costs
Among the biggest fears of the anti-Trump protesters is his threatened repeal of the Affordable Care Act, affectionately known as “Obamacare.” One of Trump’s biggest reasons for repealing Obamacare: the mandate had actually raised healthcare premiums instead of making them more affordable.
Unlike many things said during the election season, this claim isn’t purely of the Trump campaign’s making. It comes from a 2014 study by the much-respected Brookings Institute which found that, after the implementation of Obamacare:
“enrollment-weighted premiums in the individual health insurance market increased by 24.4 percent beyond what they would have had they simply followed…trends.”
In the days since the election, and following Trump’s first meeting with President Obama at the White House, Trump’s stance on Obamacare has softened. He now says that he is reconsidering an all-out replacement of Obamacare, in favor of just overhauling some of the legislation to reduce premiums and fix other problematic parts.
While this leaves the millions who rely on Obamacare for healthcare in limbo, overall consumers should expect their premiums to drop, as this issue becomes one of the major focuses of the Trump administration.
4. Higher interest rates
During his campaign, Trump’s dislike for the people running the Federal Reserve, the people who make crucial decisions about the federal interest rate, was no secret. Now, just during his first term, we will have the opportunity the replace up to five of them, including current chairperson Janet Yellen. This alone gives him great influence over interest rates, which have been kept as close to zero as possible since the financial meltdown of 2008. He could very well appoint board members who are more amenable to finally raising interest rates.
But even if Trump chooses not to exercise that influence, it’s very likely that his strongly pro-growth economic policies might do it for him. If he succeeds in creating significantly more jobs and improving conditions for businesses to grow, the current Federal Reserve members might go ahead and raise rates without his prompting, propose Jim Puzzanghera and Don Lee at the LA Times:
“His policies could create the circumstances that Fed monetary policymakers desperately have been awaiting to begin pushing rock-bottom interest rates closer to normal.”
For consumer like you and me, this could easily translate into higher interest rates on mortgages, auto loans, and credit cards, although there isn’t always a direct correlation between increases in the federal rate and consumer loans.
Luckily, any changes in the federal interest rate are likely at least a year off on the horizon, so you have some time to reconsider that re-fi or purchasing a new home.
5. Higher prices on food
One of Trump’s most divisive speaking points has been his threats to deport any undocumented or illegal immigrants in the U.S. He didn’t hesitate to include this in his “First 100 Days” plan:
“begin removing the more than 2 million criminal illegal immigrants from the country and cancel visas to foreign countries that won’t take them back.”
And what about that wall that he promise to build on the U.S.-Mexico border? Yep, that’s still there, too:
“[Fund] the construction of a wall on our southern border with the full understanding that the country Mexico will be reimbursing the United States for the full cost of such wall”
Also included are harsher prison terms for any deported immigrants found re-entering the country, especially those who have committed felonies or misdemeanors.
Naturally, as Trump turns up the heat on undocumented immigrants and deports large numbers of them, the jobs they currently occupy will be vacated, many of which are in the agriculture, food services, and hospitality industries. Some of those jobs will be taken by legal American citizens, who will likely demand higher salaries than their undocumented counterparts did. Manpower costs will go up for these companies, and, to survive, these companies will be forced to raise prices on their products.
Consumers can, therefore, expect their food — from McDonald’s or Wendy’s or Walmart — to get more expensive.
6. Lower prices on medicines
In his opposition to both the Trans-Pacific Partnership and Obamacare, Trump has spoken out specifically about pharmaceutical companies’ tendency to use legislation to protect themselves from competition and keep their prices high. Both are also mentioned in his “First 100 Days” statement. So we can expect a Trump presidency to continue to drill pharmaceutical companies, in hopes of bringing down their prices.
This is likely to be one of Trump’s most popular stances, as everyone can agree that prescription medication should be cheaper, making it an easy win for politicians of all stripes. So expect to see prescription drug prices to go down soon, possibly within Trump’s first year in office.
7. Higher prices on most goods
Bringing jobs, especially manufacturing jobs, back to the U.S. has been a central pillar of Trump’s campaign since day one. Much of his 100 days plan is focused on this goal — it might just be the single biggest goal of his presidency. Now, while this is sure to help the employment rate, it’s also likely to raise the prices of goods that are currently made overseas but would now be made in America.
The simple reason: American workers are more expensive than workers in Costa Rica or Bangladesh.
And because Trump’s aggressive stances have been potentially harmful toward trade, many experts actually think that even goods made overseas will inevitably become more expensive, as well.
Maria LaMagna at Market Watch reasons:
“Because Trump’s statements during his campaign indicated skepticism about globalization and some trade deals, in favor of nationalist rhetoric, there may be reason to believe some foreign goods could one day be more expensive.”
For Better or For Worse?
At the consumer level, then, while Americans might very well see higher employment under Trump, the cost of those jobs might likely be higher prices on everything but gas, electricity, and prescription medications. Whether the ultimate economic payoff is worth it will remain to be seen.
