Marketing in the Second Trump Term: Analyzing the Economic Impact on Disposable Income and Consumer Spending

The Trump Economic Playbook: Tax Cuts and Deregulation

The 2017 Tax Cuts and Jobs Act (TCJA) was a cornerstone of Trump's first administration. It lowered corporate tax rates and adjusted individual income brackets. If similar policies are prioritized during his second term, middle—and high-income households could see modest increases in disposable income. Corporate tax reductions, in particular, might incentivize companies to expand operations, potentially leading to job growth in specific sectors.

For marketers, a slight boost in consumer purchasing power could spur opportunities in discretionary spending categories like travel, dining, and luxury goods. However, the uneven distribution of benefits may also widen the income gap, requiring brands to tailor strategies for affluent and economically strained demographics.

Tariffs and Global Trade: The Impact on Prices

Trump’s "America First" trade policies previously focused on tariffs to reduce the U.S. trade deficit. These policies often led to higher prices for imported goods, particularly in industries such as electronics, automobiles, and agriculture. If Trump reinstates or escalates tariffs, marketers should prepare for increased production costs and higher retail prices, potentially impacting demand. According to USA Today, “Trump’s plans to impose massive tariffs and deport millions of immigrants who lack permanent legal status are likely to reignite inflation and dampen economic growth, according to forecasters. Yet his pledge to extend and expand the sweeping tax cuts passed in his first term and ease the regulatory burden on businesses could juice the economy and have mixed effects on inflation. “

In this scenario, brands emphasizing affordability and domestic production may have a competitive advantage. Simultaneously, industries dependent on global supply chains must innovate to manage costs while maintaining quality. Nobody knows the effects of tariffs and how other countries will react to them. The number marketers should keep an eye on is the US Consumer Confidence Index; according to the last update, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”

Deregulation and Its Effect on Consumer Markets

Deregulation is another hallmark of Trump’s economic agenda. Reduced federal oversight in the energy, finance, and healthcare sectors could lower businesses' operational costs but may also shift public sentiment. For instance, a rollback on environmental regulations might appeal to some consumer groups while alienating others who prioritize sustainability.

Marketers must carefully align brand messaging with their target audiences’ values. Transparency and corporate responsibility will be critical for maintaining trust, especially in industries that disproportionately benefit from deregulation.

Strategic Takeaways for Marketers

1. Monitor Policy Changes Closely: Understanding the nuances of tax reforms, tariffs, and deregulation will enable marketers to anticipate shifts in consumer behavior.

2. Segment Audiences Based on Economic Impact: Develop targeted campaigns that address the distinct needs of high- and low-income groups as economic policies reshape disposable income.

3. Prepare for Price Sensitivity: With potential tariff-related cost increases, emphasize value and affordability to retain price-conscious consumers.

4. Embrace Values-Driven Marketing: Align your brand with causes that resonate with your audience while being mindful of the risks in a politically charged environment.