Trump's Economic Legacy: A Mixed Bag for American Investors

The Trump administration’s four-year tenure brought sweeping changes to U.S. economic policy, from tax cuts to trade wars. But how did these shifts align with the desires of American voters—and what does it mean for investors? A close examination of the economic landscape reveals a complex picture of gains, setbacks, and unresolved challenges.

When Donald Trump entered the White House in 2017, his supporters—particularly in working-class and rural areas—expected a reversal of economic trends they perceived as unfair. High on their list were demands for stronger manufacturing jobs, reduced trade deficits, and lower corporate taxes to spur investment. The administration’s response included the Tax Cuts and Jobs Act of 2017, aggressive trade negotiations, and regulatory rollbacks. Let’s parse the outcomes.

The stock market’s trajectory under Trump provides an early clue. The S&P 500 rose by nearly 50% during his presidency, fueled in part by corporate tax cuts that boosted earnings. Companies like Boeing and Caterpillar, staples of the manufacturing sector Trump championed, saw stock gains, though their performance also reflected broader global demand. However, the gains were unevenly distributed. While corporations and high-income households benefited disproportionately, middle-class wages grew modestly, rising about 3% annually in real terms between 2017 and 2020—lagging behind pre-recession trends.

On manufacturing, the story is similarly nuanced. The sector added 400,000 jobs between 2010 and 2019—a reversal from earlier declines—but automation and global competition limited broader revival. Trade policies, meanwhile, produced mixed results. Imposing tariffs on $360 billion of Chinese goods did reduce the U.S. trade deficit with China by 15% by 2020, but retaliatory measures hurt U.S. farmers. Soybean exports to China fell by 60% during the trade war, prompting $30 billion in federal aid to agriculture—a sector Trump had vowed to protect.

Regulatory changes also had sector-specific impacts. Rollbacks on the Clean Power Plan and methane emissions rules helped boost domestic energy production, with U.S. oil output rising to 13 million barrels per day by 2020—the highest in history. This benefited companies like ExxonMobil and Pioneer Natural Resources, though it also intensified debates over climate policy risks. Meanwhile, financial deregulation, including easing the Dodd-Frank rules, led to increased merger activity but raised concerns about systemic risk—a caution for long-term investors.

The Trump era did achieve one clear victory: unemployment dropped to a 50-year low of 3.5% in February 2020, before the pandemic struck. This broad-based labor market strength, driven by consumer spending and tech-driven job creation, was a win for workers. Yet wage growth remained tepid for many, and income inequality—already near record highs—continued to widen. The top 1% of earners captured 26% of total income growth between 2016 and 2018, according to the Economic Policy Institute, underscoring that the benefits of growth were unevenly shared.

For investors, the legacy is a mosaic of opportunities and cautions. The stock market’s ascent and corporate profitability gains under Trump suggest that capital-intensive sectors thrived. However, structural issues—trade imbalances, wage stagnation, and climate risks—remain unresolved. The Biden administration’s focus on infrastructure and worker protections signals a shift in policy direction, but the underlying economic challenges will persist regardless of who is in power.

In conclusion, while Trump delivered on some promises—boosting equities, trimming the China trade deficit, and spurring energy production—the broader economic landscape still faces fundamental hurdles. Investors should prioritize companies positioned to navigate trade complexities, address inequality through innovation, and adapt to climate regulations. The true test of the Trump era’s economic impact will be whether these structural challenges are met with lasting solutions—or if they continue to weigh on long-term growth. The stock market’s short-term gains, while impressive, may pale against the need for sustainable, inclusive prosperity.