Behind the noise: making sense of Trump’s policymaking

Trump’s second Presidency is disruptive.  What is his agenda and could it actually work?

What is Trump’s agenda and is it working?

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Marina Gardiner, Elston Consulting

At the recent Elston Consulting Investor Day, Greg Swenson, chairman of Republicans Overseas UK, sought to shed light on the ease with which investors can have their attention diverted by Donald Trump’s fondness for controversy, and in the process miss the more serious policymaking that is underway in the day-to-day business of government.

He characterised Trump’s approach as ‘consistently unconventional’. The president often says or does something provocative – whether implementing blanket travel bans or dualling with Elon Musk - prompting a media and political backlash. But Swenson argues that behind the noise, Trump typically has a clear outcome in mind, and more often than not he gets there.

The risks: debt, legislation and China

Swenson went on to identify what he sees as three major risks facing the US economy. First he referenced the ballooning national debt, which he was at pains to note increased by US$11trn under the Biden administration. With the US Federal Reserve’s balance sheet standing at USD$9trn, Swenson asserted that he believes these figures are unsustainable.

He then cited the risk of legislative failure, such that Trump’s ‘big, beautiful bill’ may not be passed. In Swenson’s eyes, the bill is of paramount importance to the health of the economy. Without it, the US could face a serious downturn affecting what he described as “both Main Street and Wall Street”.
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The third worry is China. While trade tensions between China and the US dominate headlines, Swenson sees deeper structural issues in China’s economy: demographic decline, a bloated property sector and a fragile banking system. He believes these vulnerabilities could end up having global implications.

Growth as the only way out

​Swenson argued that the only viable path forward is to grow the US economy. In a curious choice of references, he drew a parallel to the ‘Britannia Unchained’ ideology of Liz Truss and Kwasi Kwarteng, suggesting that the US needed to have a “Liz and Kwasi moment”. In his view, neither deflating the currency nor continuing to borrow is a sustainable route. By contrast, growth policies are required such as tax reform, deregulation and trade realignment.

The cornerstones of tax reform and deregulation

Swenson was particularly bullish on tax reform. He highlighted the Senate’s move to make 100% expensing permanent, calling it a powerful incentive for business investment. He also emphasised the importance of deregulation ie, the reduction of red tape, which by his calculations would save US households approximately US$2,000 each, and more significantly, businesses US$13,000 per employee in compliance costs.
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This is something Trump has already started on but Swenson predicted even more aggressive deregulation in this second term, especially in the energy sector. “Drill, baby, drill,” he quipped, noting that the US became energy independent during Trump’s first term, a status he expects to return.

Trade policy: from scalpel to sledgehammer

Swenson defended Trump’s aggressive trade tactics, arguing that the more delicate approach of previous administrations failed to deal with what he perceives as chronic trade deficits. He acknowledged that the Trump administration’s methods created a heavy workload for trade negotiators, but insists they are necessary. “The scalpel just hasn’t worked. They had to go full sledgehammer.”
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He also sees trade policy as a tool for industrial revival. In his view, Trump’s tariffs are not just about revenue, they’re about reshaping the economy and bringing manufacturing back to the US.

Real wage growth, healthcare and populist appeal

For Swenson, the ultimate measure of Trump’s economic success is real wage growth. He contrasted the anaemic wage gains of the Obama years with the 6.3% growth seen in 2019 under Trump. He noted that the biggest beneficiaries were working-class Americans and minority groups, those often left behind in previous economic cycles.

Swenson sees this as both a political and economic imperative. “He’s trying to pay them back,” he said, referring to Trump’s blue-collar base. But Swenson also believes that wage growth supports the broader market by strengthening the real economy.
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Swenson also touched on healthcare, acknowledging Trump’s populist push to lower drug prices. While he doesn’t expect the pharmaceutical industry to suffer, he does foresee a rebalancing of global pricing. In his view, the US consumer has long subsidised low drug prices abroad, a dynamic that Trump has sought to change.

Looking ahead: Trump 2.0

​Swenson described Trump’s second term as potentially “Trump 1.0 on steroids.” He expects more aggressive policies across the board - more tariffs, more deregulation, and a deeper commitment to reshoring manufacturing. He acknowledged that this could be disruptive but insisted it would be necessary. “The way the economy was working—based on outsourcing and borrowing—is just unsustainable.”

Faith in Trump’s aims

​Despite the risks, Swenson remains optimistic. He sees strong retail investment, a resilient real economy and a policy agenda focused on growth. He believes that Trump’s approach - though unconventional – genuinely offers the best path to sustainable prosperity. For investors willing to look past the headlines, Swenson suggests, there is reason to be hopeful.