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Trump’s First Actions: Which Could Impact the Economy?
Trump kept some of his “day one” promises in a bevy of executive orders.
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Updated · 12 min read
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Federal Judge says Trump disobeyed order to pause federal spending freeze
On Monday, a federal judge ruled that Trump’s team has continued freezing federal spending and grants. On Jan. 27, the Office of Management and Budget ordered a temporary pause on all federal funding, with some exceptions. Rhode Island District Court Judge John J. McConnell said that Trump’s team has not complied with a court-ordered pause to the spending freeze.
In his decision, McConnell said that the broad, sweeping funding freeze is “likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country.” Federal spending is approved each year by Congress.
The Trump camp told the court that it is “just trying to root out fraud.” The judge ordered Trump to resume the funding of all spending programs that were previously funded and must continue funding other agencies, specifically including the National Institute for Health (NIH). On Sunday, the NIH announced it was capping funding for indirect funding costs at 15%.
It’s unclear if the Trump administration will comply with the judge’s order. Later in the day, the administration filed an appeal.
See below for a play-by-play of the funding freeze drama.
Trump announces new steel and aluminum tariffs
On Monday, President Trump announced 25% tariffs on all steel and aluminum imports. The tariffs go into effect on March 12.
The top importers of steel to the U.S. include Canada, Mexico, Brazil, South Korea, Japan, Germany, China, Taiwan, Vietnam and Algeria, according to the International Trade Administration. Trump said that no trade partners would be exempt from the tariffs.
During Trump’s first presidency, he imposed a 25% tariff on aluminum and a 10% tariff on steel from Canada, Mexico and the European Union. The tariffs continued under Biden. An analysis of those previous tariffs by the Tax Foundation found foreign exporters largely passed the cost of the tariffs to U.S. companies. The industries that were most impacted by the aluminum and steel tariffs included transportation, construction and packaging industries, according to the analysis.
Trump lays out tax priorities
On Feb. 6, during a closed-door meeting with GOP House leaders, Trump reportedly laid out his tax priorities, which include:
Extending the expiring 2017 Tax Cuts and Jobs Act.
Enacting tax breaks for products that are made in America.
Enacting his “no tax on tips” plan.
Cutting taxes on overtime pay.
Cutting taxes on Social Security benefits.
Nixing tax breaks for owners of sports teams.
Eliminating the carried interest tax deduction
The Committee for a Responsible Federal Budget (CRFB), analyzed Trump’s tax priorities and estimates it would be costly, resulting in a revenue reduction by anywhere from $5 trillion to $11.2 trillion over 10 years; and a 1.3% to 3% reduction in Gross Domestic Product (GDP). The CRFB projected that the tax priorities as proposed would boost debt to anywhere from 132% to 149% of GDP over 10 years, from an estimated 100% at the beginning of 2026, unless the costs of the priorities are otherwise offset.
The tax priority with the greatest economic impact would be extending his 2017 Tax Cuts and Jobs Act, which the CRFP estimates could cost anywhere from $3.9 to $4.8 trillion over a 10-year period.
Tariffs on Canada and Mexico paused; China tariffs go into effect
As of Feb. 3, new tariffs on goods from Canada and Mexico will be delayed by one month following conversations between leaders.
On Jan. 31, President Donald Trump announced a 25% tariff on all goods imported to the U.S. from Mexico and Canada with one exception: Oil from Canada would face a 10% tariff. He says tariffs are a tactic to address issues like immigration and drug trafficking.
The tariffs, which were set to begin on Feb. 4, were delayed by one month after both Mexican and Canadian governments pledged to beef up border patrol efforts.
A 10% tariff on China went into effect Feb. 5. China responded with retaliatory tariffs ranging from 10% to 15% on a specific set of energy products, cars and agricultural machinery. These tariffs went into effect on Feb. 10.
However, on Feb. 7, Trump suspended tariffs on small packages from China. Prior to the announcement, the United States Postal Service USPS, in order to comply with the sweeping 10% tariff, briefly stopped accepting any packages from China. All packages from China under $800 will be imported tariff-free to the U.S.
Mexico, Canada and China are the three top trading partners for the U.S. Both Mexico and Canada are more dependent on the U.S. than vice versa, which means the economic impact could be greater to those two countries than to the U.S. China, meanwhile, has the largest share of trading in the world.
It’s always possible that tariffs imposed by the U.S. could result in retaliatory tariffs, which would increase prices on goods imported from the U.S. and could potentially lead to a trade war.
On Feb. 1, Canada announced 25% tariffs on $155 billion of American goods. But following a call with Trump on Monday, Canadian President Justin Trudeau said Canada’s tariff on the U.S. will also be pushed back by one month.
Estimates by Peterson Institute for International Economics (PIIE) show 25% tariffs on Mexico and Canada would slow growth and accelerate inflation. U.S. consumers would see prices rise on goods coming from those countries. Consumers would also see higher prices for goods manufactured in the U.S. that require supplies from those countries.
The Observatory of Economic Complexity (OEC) which supplies global trade data, says the chief products that Mexico exports to the U.S. are computers, cars, as well as motor vehicles, parts and accessories. The U.S. exports mainly refined petroleum, motor vehicle parts and accessories, as well as petroleum gas to Mexico.
Canada primarily exports crude petroleum, cars and petroleum gas to the U.S. Meanwhile, the U.S. mainly exports cars, refined petroleum and delivery trucks to Canada.
China exports a wide variety of products and supplies to the U.S. including telephones, computers, electric batteries, light fixtures and motor vehicle parts, and accessories. The U.S. mainly exports soybeans, cars, petroleum gas, integrated circuits and crude petroleum to China.
Federal judge blocks Trump’s federal spending pause
Confusion over the details of a federal funding interruption continued throughout the week with seemingly no clear answer as to whether or not the pause was still in place.
But on Jan. 31, a federal judge in Rhode Island granted a temporary restraining order that blocks the pause. U.S. District Judge Jack McConnell approved the request after hearing arguments in a lawsuit filed by 22 Democratic-led states and the District of Columbia. In the decision, the judge wrote that the White House’s actions likely “violate the Constitution and statutes of the United States.” The restraining order is set to last until the court rules on the state’s motion for a preliminary injunction.
It all started with a memo issued on Jan. 27 by the Office of Management and Budget (OMB), which called for the pause of all federal spending, grants and other financial assistance programs. The OMB said the programs would be reviewed to ensure they align with President Trump’s various executive orders.
Assistance programs and activities that the memo named during the review included, “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”
But there was little clarity on which specific programs the memo was referring to. Various reports speculated that the pause would have included Medicaid; transportation funding; small business loans; disaster relief aid; FHA mortgage insurance; as well as other funding for state, local and tribal governments. Assistance programs for individuals — Medicare, Social Security, food assistance through the SNAP program and student loans — were expected to continue without interruption.
Late on Jan. 28, after a day of uncertainty and conflicting reports on the scope of Trump's order, a federal judge in Washington D.C. granted a "brief administrative stay" to block the spending freeze pending further examination by the courts. Judge Loren AliKhan's order expired on Feb. 3, at 5 p.m. EST.
The following afternoon, the White House issued a memo rescinding Monday’s OMB order, but a later post on X from the White House Press Secretary Karoline Leavitt claimed a funding freeze was still in place. Leavitt said the purpose of the memo was “To end any confusion created by the court's injunction.”
Intention aside, Leavitt’s comments launched even more chatter about the reality of the pause.
However, Sen Chris Murphy (D-CT) confirmed on X that the funding shutdown was still in place.
Sen. Tim Kaine (D-VA) said in a video he posted on X “This thing ain’t over, we’re going to have to keep battling.”
The initial memo set a Feb. 10 deadline for agencies to submit detailed information on programs, projects or activities included in the pause. There may also be possible exceptions on a case-by-case basis, the memo notes.
The pause faces further potential legal wrinkles. The Spending Clause in the U.S. The Constitution gives Congress the power to fund all kinds of programs. Each year, Congress approves funding for grants, loans and financial assistance programs — that makes those programs legal obligations.
The Impoundment Control Act of 1974 requires the executive branch to spend funds that Congress approves of. In January 2020, the U.S. The Government Accountability Office said the OMB’s withholding of obligation funds for the Department of Defense for assistance to Ukraine violated the ICA. In the memo, the GAO wrote, “Faithful execution of the law does not permit the President to substitute his own policy priorities for those that Congress has enacted into law.”
Trump floats tariffs on steel, semiconductors and pharmaceuticals
On Jan. 27, Trump said he plans to enact tariffs on steel, aluminum, copper, pharmaceuticals, computer chips and semiconductors, in the hopes of bringing manufacturing back to the U.S.
Trump said tariffs on computer chips and semiconductors from Taiwan could be anywhere from 25% to 50% or even up to 100%. Tariffs on chips and semiconductors could lead to higher prices for computer products including smartphones.
In response, the Taiwanese government said the current business model with the U.S. is a win-win, while the Taiwan economy ministry called the two nations’ semiconductor businesses “highly complementary to each other.”
The Taiwan Semiconductor Manufacturing Co. (TSMC) — the largest producer of semiconductors in the world — is investing $65 billion in Arizona for new chip manufacturing plants, as part of the Biden administrations’ CHIPS and Science Act. The Act also gave funding to U.S. companies for the creation and expansion of chip manufacturing plants.
President Donald Trump made hundreds of “day one” pledges while campaigning, but they didn’t all materialize. That said, Trump’s presidency is young and he has a long list of plans he wants to enact in his first 100 days in office and beyond.
On Trump’s first day as president, he made 26 executive orders, in total — a few of which have already been met with legal actions. In one order he pulled back nearly 80 executive orders made by former President Joe Biden, including a recent effort to lower Medicare and Medicaid drug costs.
Trump’s first set of orders run the gamut, but several could impact the economy and your personal finances. Here’s a few that made the cut.
Agencies must take action to lower prices
Trump ordered the heads of executive departments and agencies to deliver price relief to Americans. The order listed a number of actions, albeit vague ones, that departments should take to lower costs. That could include:
Lowering the cost of housing and expanding supply.
Getting rid of red tape and “rent-seeking practices” that lead to higher health care costs.
Nixing “counterproductive” requirements that increase home appliance costs.
Creating more job opportunities, including those that bring back “discouraged workers.”
Eliminating “harmful, coercive” climate polices in order to lower the costs of food and fuel.
The order requires department and agency heads to report back within 30 days with updates and then every 30 days thereafter.
‘Unleash’ U.S. energy production
Trump signed a number of executive orders aimed at expanding U.S. energy dominance and lowering prices for consumers. Most notably, Trump declared a national energy emergency, which allows his administration to use “emergency authorities” to cut through red tape and expand domestic energy production and transportation.
It’s worth noting that presidents can’t control gas prices. Their policies might have some influence but it often takes years to materialize as domestic companies act on the changes and take into account global market dynamics.
Another of Trump’s executive orders signed Jan. 20 takes steps to open opportunities to extract more of Alaska’s natural resources by:
Maximizing natural resource development and production on federal and state lands.
Expediting permitting for energy and natural resource projects.
Prioritizing the growth of the state’s liquified natural gas industry.
Another order outlines broad energy policy meant to encourage production and limit regulations. It seeks to:
Expand off-shore exploration and drilling.
Grow production of non-fuel minerals, including rare earth minerals.
Eliminate motor vehicle regulations that promote the adoption of electric vehicles over gas-powered cars and trucks.
Remove rules that limit the kinds of consumer goods and appliances available, including light bulbs, dishwashers, washing machines, gas stoves, water heaters, toilets and shower heads, among others.
In other energy-related moves, Trump issued a memo that temporarily stops the federal government from granting new or renewed leases for off-shore wind energy projects. He also pulled the U.S. out of the Paris Climate Agreement.
Pulls the U.S. out of global tax deal
Trump declared that the Organization for Economic Cooperation and Development (OECD) Global Tax Deal, which went into effect early in 2024, “has no force or effect,” in the U.S. The deal, which Biden arranged with nearly 140 countries in 2021, applied a minimum tax on corporate income in every country where a company operates.
Trump’s action effectively means the U.S. is no longer part of the deal. He also instructed the U.S. Treasury to prepare “protective measures” against countries that plan to or have already instituted tax rules that would impact companies in the U.S.
No mass deportations yet, but added border restrictions
Trump didn’t yet order mass deportations as he pledged to do on day one, but he did take several executive actions that could impact citizenship, southern border security, as well as the future for undocumented immigrants in the United States. Economists say undocumented immigrants play a critical role in the U.S. labor force. The orders include:
Declaring a national emergency at the southern border and securing the border with physical barriers and additional personnel. He also made an order empowering the military to take action at U.S. borders.
Barring asylum for new arrivals at the southern border and halting the Refugee Admissions Program.
Ending birthright citizenship for future children born in the U.S. to parents who are undocumented immigrants. This order contradicts the 14th Amendment of the Constitution, which states that “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” The president does not have the power to overrule or change a constitutional amendment and 18 states have already sued to stop the action.
No tariffs, but a close look at trade deals
Trump did not impose new tariffs on U.S. trade partners, but he laid the groundwork for future actions.
In a memo, he directed his cabinet to investigate trade deficits, as well as review trade policies and agreements. Trump also called on the departments of Commerce and Homeland Security to look into the feasibility of establishing an External Revenue Service whose primary purpose would be to collect trade-related revenue.
Separately, Trump told reporters he could enact 25% tariffs on Canada and Mexico as soon as Feb. 1. He also said he “may” impose across-the-board tariffs, as he promised during his campaign, “but we’re not ready for that just yet.”
(Photo by Anna Moneymaker/Getty Images News via Getty Images)
