Thought Leadership

Considerations for the Second Trump Administration

Client Updates

We are ready to help our clients navigate the potential legal and regulatory changes that could arise under the next Trump Administration. We will continue to provide updates as developments evolve and encourage you to reach out to us.

Antitrust & Competition

  • We could see changes to some of the policy statements and guidance from the Biden Administration. This could include a potential reconsideration or withdrawal of the 2023 Merger Guidelines, reinstitution of the Vertical Merger Guidelines and reinstitution of the Healthcare Policy Statements that provided clarity on how information can safely be shared among competitors. It is possible, though perhaps less likely, that the new HSR rules could be withdrawn (the fact that they were already unanimously approved by the current Commissioners might complicate this).
  • Perhaps the biggest change will be an increased willingness to consider merger remedies in strategic transactions. Deals that require a remedy to get past regulatory review would see an increased likelihood of finding a fix that the agencies might approve.
  • We will see a new chair of the FTC, but it will likely take a few months to approve a new Commissioner to replace Lina Khan, whose term ended in September but can remain in her seat until a new Republican Commissioner is confirmed. One question could be whether Khan resigns (leaving a 2-2 split) or waits for her replacement to be approved by Senate.
  • The ban on non-competes is unlikely to be enforced at this point.

Please join us for an exclusive, post-election webinar broadcast live from Washington, D.C. as we discuss how the outcome of this year’s election could shape the future of antitrust law in the United States. Register here: 2024 Election: Potential Antitrust Considerations for a Second Trump Administration.

Environmental Law and Policy

  • Similar to 2017, the next Trump Administration will undertake an aggressive effort to review, reconsider, and revise a substantial number of environmental regulations, particularly those seen as unreasonably constraining oil and gas production and electricity generation. Affected regulations could include EPA’s greenhouse gas standards for new gas-fired and existing coal-fired electric generation, along with certain National Ambient Air Quality Standards (e.g., PM2.5). We also expect a change in posture on EPA’s “Good Neighbor Plan” and related disapprovals of state implementation plans (a matter recently addressed in a stay order issued by the U.S. Supreme Court in a case styled Ohio v. EPA).
  • On the environmental enforcement front, we should see a return of “back to basics” approaches at the federal level, with a focus on traditional air, water, and land remediation issues rather than a focus on climate and environmental justice. After a general decline in the numbers of federal environmental enforcement cases over the preceding decade, the Biden EPA managed to begin to bend the curve upward with relative increases in the numbers of cases in the last two years. We expect the new administration to return to a narrower use of consent decrees, deference to state enforcement, and seeking ways to reform citizen suits, although past experience suggests that the next Trump Administration will continue to prioritize worker safety cases, among others. The new administration will also take a fresh look at recent means to drive new regulatory objectives.
  • However, the path forward is not entirely clear across all energy and environmental issues. In contrast with the first Trump Administration, President-Elect Trump appears set to take counsel from some new voices, including Elon Musk and Robert Kennedy Jr., both with strong views on these issues. In particular, this could present some interesting new dynamics for policies impacting electric vehicles, climate, and chemicals and pesticides regulation.
Please view the recording of our recent webinar: 2024 Election – Environmental Law and Policy Update

White Collar, Corporate Investigations & Securities Litigation

  • The work of the line attorneys and first-level supervisors in the DOJ and US Attorney’s offices that are the most active in the white-collar space is likely to be unaffected by the change in administration. While there was a perceived tail off in white-collar prosecutions in the prior Trump Administration, this arguably had more to do with the last of the investigations from the 2008-2010 financial crisis finally winding down than administration priorities. Indeed, certain areas of white-collar prosecution — including export control prosecutions, prosecutions targeting the “demand” side of foreign bribery, and prosecutions of alleged corporate malfeasance—are likely in-line with the second Trump Administration’s priorities.   
  • We are likely to see the SEC focus on traditional enforcement priorities, such as insider trading, accounting fraud, misstatement cases and FCPA; those cases are likely to have broad bipartisan support and are consistent with protecting the “Main Street investor” from alleged corporate malfeasance or perceived unfairness in the markets. We expect to see less of a focus on crypto enforcement, ESG, cyber, and AI-related disclosure cases.
  • We expect opioid-focused criminal and civil matters, including against distributors, manufacturers, and prescribers, to remain a bipartisan issue.
  • With a Republican Senate, a new SEC Commissioner could be appointed sooner than is typical, probably within first few months of 2025 rather than into the summer/fall.
  • If the expected increase in public company M&A activity materializes, then we can expect to see a similar increase in private securities litigation filings challenging the disclosures and other aspects of those deals.
  • If we see increased market volatility, as we historically have following presidential elections where the incumbent party loses, then we can expect an uptick in stock drop suits.

Corporate Governance

President-Elect Trump’s second administration would likely bring a shift in focus for corporate boards due to friendly changes in the regulatory and enforcement landscape.

Regulatory Agency Leadership Changes

  • President-Elect Trump will likely begin his second term by replacing key regulatory agency heads such as the heads of the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and the Commodity Futures Trading Commission.[1]

Easing of Antitrust Enforcement[2]

  • The current aggressive antitrust enforcement policies of the Biden Administration’s Department of Justice and Federal Trade Commission are likely to be eased to a certain degree and more closely reflect the policies of the first Trump Administration.The new administration is also likely to show an increased willingness to consider merger remedies in strategic transactions.At the margins, this shift may allow boards greater flexibility to evaluate strategic transactions that they might be hesitant consider in the current environment. Despite this likely adjustment at the margins, expect a second Trump Administration to continue investigating and, where necessary, challenging transactions, particularly in the technology sector, which was an area of active focus in his first administration.[3]

Increased Tariffs

  • Following President-Elect Trump’s pledge to impose a universal 10% tariff and much higher tariffs specifically on goods from China, corporate boards should consider supply chain implications, domestic manufacturing and reshoring initiatives.[4]

Securities Regulation

President-Elect Trump’s Administration is expected to have a significant impact on legal trends in capital markets and enforcement, primarily through leadership changes at the SEC and shifting regulatory priorities in several areas, including cryptocurrencies and ESG-related disclosure requirements.

SEC Leadership and Direction

  • On November 21, 2024, the SEC announced that its 33rd Chair, Gary Gensler, will step down effective at 12:00 pm on January 20, 2025.
  • Chair Gensler faced criticism for his stringent regulatory stance on financial markets, particularly concerning cryptocurrency markets. The next SEC Chair will likely be someone that would move to reduce these regulatory constraints.
  • We are likely to see turnover in the leadership of the various Divisions within the SEC, including the Division of Enforcement.

ESG and Climate Considerations

  • The next SEC Chair may begin paring back existing climate-related rules, such as those adopted by the SEC in March requiring large publicly traded companies to adopt extensive climate disclosures as early as fiscal year 2025.[5]
  • Moreover, firms offering environmentally friendly investment options may begin to face increased pressure with enhanced justification requirements for ESG-related investment decisions. For example, President-Elect Trump pledged on the campaign trail to reinstate an executive order he made during his first term that made it harder for employers to offer ESG funds in employees’ 401(k) retirement plans.[6]
  • The new human capital management and board diversity disclosure rules anticipated from Democrats may also fail to materialize.[7]

Cryptocurrency Regulation

  • President-Elect Trump is expected to follow through with his express commitment to making America “the crypto capital of the world” by ushering in pro-cryptocurrency policies, sparking optimism in the crypto sector and yielding new ETF activity.[8]
  • Rather than total deregulation, this policy would likely involve continued regulatory oversight of the crypto industry, with clarification of the SEC’s and CFTC’s jurisdictional boundaries and definitions for crypto assets.[9]

Private Equity

Private equity under a second Trump Administration would likely see both opportunities and challenges distinct from the Biden era, requiring firms to recalibrate their investment strategies while navigating new policy priorities and market conditions.

Cabinet and Advisory Positions

  • Given the appointments of Steve Schwarzman, Wilbur Ross, Steve Mnuchin and Gary Cohn in his first administration, President-Elect Trump may look to private equity-friendly appointments to cabinet and advisory positions.[10]

Enhanced Opportunities

  • The Trump administration is generally expected to be more business-friendly and growth-oriented, creating investment opportunities.
  • Deal activity levels are expected to increase now that uncertainty surrounding election results has been resolved.
  • Moderated levels of inflation along with commencement of an interest-rate cutting cycle will likely create a more investment-friendly environment.
    • Lower interest rates for borrowing are expected, with related improvement in deal economics and capital expenditure and working capital costs, which should ultimately lead to more M&A exits.
    • Improved economic conditions are expected to boost the IPO market.
    • Noteworthy, bond market yields have increased due to the market’s forecast of greater deficit spending under the second Trump Administration. Following this, however, the Federal Reserve’s trend to reduce rates is expected to slow before ultimately reversing as the supply of new bonds increases.
  • Widely expected de-regulation and relaxation of enforcement is likely to improve the private equity landscape.
    • The first Trump Administration featured extensive de-regulation and President-Elect Trump promised on the campaign that this will continue in his second term.
    • Less aggressive antitrust enforcement is expected at the margins, with a greater willingness to consider divestiture ‘fixes’ to remedy problematic transactions. In addition, following the departure of Jonathan Kanter at the DOJ and Lina Khan at the FTC, less aggressive posturing is expected from incoming leadership. However, the first Trump Administration was active in antitrust enforcement and continued interest in ‘Big Tech’ is likely.
    • Enforcement actions by the SEC and other federal agencies are expected to decrease.
    • If the SEC abandons its greenhouse gas disclosure rule, compliance costs for PE portfolio companies would be reduced.
    • New opportunities are likely to arise in real estate development due to reduced regulation and opened federal lands.[11]
    • Also probable is increased activity in fintech and crypto-related sectors which would now have a more favorable regulatory environment in comparison with President Biden’s strict oversight.[12] 
  • President-Elect Trump’s execution of ‘America First’ policies are likely to enhance opportunities in traditional energy sectors like oil and gas and U.S.-based manufacturing.[13]
  • Domestically, President-Elect Trump has encouraged energy production as a means to create jobs, boost overall economic growth and lower at-the-pump gasoline prices.
  • Internationally, President-Elect Trump believes more U.S. production will result in lower per barrel prices on the global market and will lower Russia’s oil-based revenue, thus encouraging Russia to negotiate an end of the war in Ukraine.
  • Reduced energy prices, combined with lower corporate taxes and interest rates, should boost operating performance of PE portfolio companies and overall returns.
  • No indication of a change in carried interest treatment by the IRS.

Potential Challenges

  • Green industries such as wind farm development and electric vehicle charging infrastructure may experience adjustments to federal tax credit and procurement policies.[14]
  • Depending on the degree to which President-Elect Trump follows through on his campaign promises regarding tariffs, the implementation of global tariffs through the issuance of executive orders (potentially a 10% universal baseline on imports and much higher on Chinese goods) will impact portfolio company valuations and operations exposed to import costs.[15]
  • Threatened imposition of tariffs on Chinese and other imports may be inflationary and could result in interest rates stagnating or eventually increasing.
  • If mass deportations actually occur, they could be inflationary, increase overall wages and have unintended consequences for growth, interest rates and overall returns. 

Tax

Regulatory

  • Tax planning and compensation issues could be affected given President-Elect Trump’s campaign proposals to extend expiring 2017 Tax Cuts and Jobs Act provisions, lower the corporate tax rate for domestic manufacturers, exempt certain income such as tips, overtime pay and social security benefits from taxation, and enact a variety of tariffs.

Federal Tax

  • The next Trump Administration is expected to pursue extending individual and estate, gift, and generation-skipping transfer tax cuts of the 2017 Tax Cuts and Jobs Act that are set to expire at the end of 2025 and restore expensing provisions for equipment and research and development.  Expiring provisions include, for example, reduced personal income tax rates, the 20% deduction for certain business income earned by individuals through pass-through entities, and the increased estate tax exemption.
  • President-Elect Trump has proposed excluding certain income (such as tips, overtime pay, and social security benefits) from taxation, as well as reducing the corporate income tax rate, reducing the tax rate applicable to global intangible low-taxed income (GILTI) and raising the endowments tax on university endowments that exceed certain thresholds.
  • President-Elect Trump also has proposed a variety of tariffs. To the extent tariffs could impact outcomes of performance criteria under incentive compensation plans, companies may consider whether any changes to such performance criteria are warranted
  • Given the potentially high cost of these proposals, certain aspects may need to be pared back or eliminated to garner broad Republican support. Clean energy tax incentives may be on the chopping block to pay for extension of the tax cuts of the 2017 Tax Cuts and Jobs Act since President-Elect Trump has not been a supporter of clean energy tax incentives. Given that clean energy tax incentives have been of significant benefit to many Republican-controlled districts across the country, however, there could be Congressional resistance to reduction or repeal of some of these incentives.

State Income Tax

  • President-Elect Trump has indicated that he may push to eliminate the SALT deduction cap. This proposal would particularly impact individuals who pay state income tax in high-tax states like New York, New Jersey, and Connecticut.If the deduction cap is eliminated, it may spur changes to state elective pass-through entity taxes.
  • Any changes to the federal income tax base (e.g., arising out of changes to expensing provisions) may impact state income tax computations, as most states use the federal income tax base (with modification) as a starting point in computing state income tax.States may differ in the extent to which they conform to federal income tax base changes.

Intellectual Property

  • President-Elect Trump has not previously discussed patents, but given positions he has taken, he could favor stronger patent rights.
  • On many issues, President-Elect Trump's approach as president was "more hands off from the government, and letting industry self-regulate," which could inform his approach on patents.
  • Appointing a new USPTO director could be one way that President-Elect Trump would influence intellectual property rights. In his first term, Trump selected Andrei Iancu, who adopted policies that were embraced by patent owners, including giving the Patent Trial and Appeal Board more discretion to deny patent challenges.

Technology

FCC/Telecom

  • FCC/telecom regulatory issues are not of highest priority for President-Elect Trump
  • Carr or, less likely, Simington (both current Republican members of FCC, and Trump loyalists) may be chosen as new Chair of FCC
  • The DOJ/Team Telecom deal-vetting process will likely remain in place
    • China/Russia national security concerns will be ongoing
  • Possible general de-regulatory trends include:
    • Relaxed limits on M&A in telecom space
    • Repeal of restrictions on concentration of local radio and TV markets
    • Net Neutrality issues (re terms of service of broadband providers) may be targeted for elimination by Republican FCC commissioners
  • Future of various funding programs under FCC umbrella
    • Universal Service Fund (USF). The 5th Circuit ruled USF unconstitutional (as a tax impermissibly imposed by the agency; should only be done by act of Congress) while two other Circuits upheld USF in current form. Rather than have the issue go to the Supreme Court, Republican members of the FCC are likely to prefer a resolution from Congress (e.g., Congress should pass a law to make USF payments a tax that is collected via IRS rather than administered by the FCC) [Note: background here is the Chevron decision by the US Supreme Court, which as a practical matter took away a lot of ability of Federal government agencies to make policy—i.e., Congress must do it.]
    • BEAD/Affordable Connectivity Program (ACP). This program is reasonably likely to continue in place since BEAD awards have been announced and benefits are likely to go to GOP-controlled rural/ex-urban districts, so Republicans will want those to flow.

Energy /Inflation Reduction Act / Tax

  • Universal Service Fund (USF). The 5th Circuit ruled USF unconstitutional (as a tax impermissibly imposed by the agency; should only be done by act of Congress) while two other Circuits upheld USF in current form. Rather than have the issue go to the Supreme Court, Republican members of the FCC are likely to prefer a resolution from Congress (e.g., Congress should pass a law to make USF payments a tax that is collected via IRS rather than administered by the FCC) [Note: background here is the Chevron decision by the US Supreme Court, which as a practical matter took away a lot of ability of Federal government agencies to make policy—i.e., Congress must do it.]
  • BEAD/Affordable Connectivity Program (ACP). This program is reasonably likely to continue in place since BEAD awards have been announced and benefits are likely to go to GOP-controlled rural/ex-urban districts, so Republicans will want those to flow.
  • Campaign promises to lower energy prices will be difficult to transform into effective policy. Easing restrictions on new energy projects, through permitting and environmental reform will likely accelerate new oil and gas development, however, new energy infrastructure will take time to come to market. This delay, when matched with significant demand growth in the U.S., especially in the power sector, will more than offset any near-term increase in supply from policy changes, making it more likely that energy prices will rise in the near-term. 
  • A wholesale overturn of the Inflation Reduction Act (IRA) is unlikely. The legislation has spurred massive investment in traditionally republican districts, and the out-right repeal would put investment and jobs at risk, making the path to congressional support quite challenging (in August ,18 Republican House members sent a letter to House Speaker Mike Johnson stating they would not support a full repeal of the IRA). 
  • The tax credits expanded and created by the IRA are broadly quite popular. Direct energy transition funding from Department of Energy (DOE) Programs are potentially at greater risk, or may be redirected towards more fossil friendly investments.
  • Even if there were a significant repeal of the tax credits under IRA, those changes are expected to be phased in, and the existing rules allow for locking in credits through a start of construction safe harbor, which will allow for several years of ongoing deployment of qualifying projects.
  • We could see more successful efforts to repeal isolated portions of the IRA (the Advanced Technology Vehicles Manufacturing loan program and the tax credit for EVs appear to be at more risk than other IRA supported industries). Carbon intensity models that are used to determine tax credit eligibility may be materially softened, opening technologies that have been struggling to access credits to new tax credit support. 
  • Changes to domestic content requirements, or penalties for foreign content in tax credit eligible energy technology are possible, especially for Chinese produced components or content.
  • There will be a strong push to get any proposed tax credit guidance related to the IRA final this year — expect regulations on 45V, 45Z and others to be released over the next several weeks.
  • Expect DOE to press to make commitments for loan guarantees and other programs, to lock in those commitments in advance of the administration change.  Expect challenges to navigating complex programs like the Loan Program Office as staffing turnover and new program focus may materially slow the approval process.
  • Remaining appropriated funds under DOE may be reallocated away from energy transition technologies to more traditional energy projects.
  • Expect some market participants to move quickly to secure positions for tax credits and other programs over the coming months in advance of any possible repeals. If broader tax credit repeals appear possible, securing vendor contracts to secure safe harbor positions will become extremely competitive.
  • Approvals for renewable projects on federal lands may become more difficult to obtain, while approvals for fossil generation and extraction projects will likely become easier.

FERC

  • New chair who will implement new administration’s policy priorities.
  • Potential to see changes to the Office of Public Participation, which is charged with promoting public voices at FERC, including those of tribal governments and communities, environmental justice communities, and historically marginalized communities.
  • FERC could redirect efforts to implement long-term regional transmission planning.
  • Relaxed environmental policies could lead to the delayed retirement of existing fossil fuel generation and the development of additional natural gas-fired generation.

CFTC

  • The new administration will have the power to replace current CFTC chair, Rostin Behnam, on an interim basis with another CFTC Commissioner, which would likely be either CFTC Commissioner Summer Mersinger or Caroline Pham.
  • A new permanent chair will be selected to implement the administration’s policy priorities.
  • CFTC is likely to focus on possible Congressional action regarding digital asset oversight and the potential for increased CFTC jurisdiction over crypto.
  • There will be likely realignment of CFTC enforcement priorities, with a change of emphasis in the areas of digital asset and environmental market enforcement, particularly moving away from fringe cases and focusing on core fraud and market conduct issues.
  • There is potential for reconsideration of Enforcement Division guidance on penalties, cooperation, and self-reporting.
  • CFTC may focus more on providing industry guidance in key market areas as opposed to regulation by enforcement.
  • There is potential for rulemaking focused on codifying long-standing CFTC no-action letters.

International Trade

  • Customs
    • We expect to see a substantial increase on tariffs for foreign goods entering the United States, including but not limited to, tariffs on goods from China coupled with a potential plan to phase out Chinese imports of essential goods.
    • We also anticipate substantial tariffs on Mexican-made goods, including vehicles.
    • President-Elect Trump has previously indicated a desire to reinstate tariffs on farm imports and impose tariffs up to 20% on everything else the United States imports.
    • We also anticipate potential penalties on domestic manufacturers that move production to foreign countries including increased import taxes.
  • CFIUS
    • We will likely see increased scrutiny on Chinese investment in U.S. infrastructure related to energy, technology, telecommunications, and natural resources.
    • President-Elect Trump has also mentioned requiring Chinese entities to unwind currently held investments that risk U.S. national security. It is unclear what investments would rise to the risk level necessary to trigger such a mandate.
    • With Republicans now controlling the Congress along with the White House, we may be seeing more aggressive Republican sponsored legislation dealing with foreign investment, both inbound and outbound, which previously may have not made it through the legislative process.
  • Sanctions and Export Controls
    • President-Elect Trump has indicated a desire to end the war in Ukraine and to limit American support for the war. If there is a withdrawal of support for Ukraine in the Russia/Ukraine war, we might see a roll-back of certain of the sanctions imposed over the last four years.
    • We anticipate that sanctions on Iran, North Korea, Cuba, and Syria to continue.
    • Given the recent political issues in Venezuela, the U.S. could see a renewed effort to revive the Venezuelan sanctions and continue to drive national security concerns in Venezuela through heavy financial sanctions.
    • The next Trump Administration is likely to be keenly focused on regulating high-tech exports to China, including additional sanctions and export controls on China’s semiconductor sector. Further, President-Elect Trump’s “America First” strategy is likely to result in renewed interest in reducing America’s dependence on Chinese technology.
    • We expect the next Trump Administration to be more unilateral in its actions than the Biden administration has been.

[1] 2024 election outcome scenario: Divided government under Trump; How could Trump overhaul US financial regulators if he wins on Nov. 5? | Reuters

[2] With consideration provided by our Antitrust Group

[3] Trump 2.0 Is Getting More Likely. How Corporate Boards Should Prepare. - Barron's

[4] 2024 election outcome scenario: Divided government under Trump

[5] Trump SEC would end climate disclosure rule, target ESG investments

[6] Trump SEC would end climate disclosure rule, target ESG investments

[7] Trump 2.0 Is Getting More Likely. How Corporate Boards Should Prepare. - Barron's

[8] Solana, XRP ETFs Brace for Election Impact as Trump Eyes Pro-Crypto SEC Leadership Change - EconoTimes

[9] Trump SEC would end climate disclosure rule, target ESG investments

[10] The Trump Presidency’s Impact on Private Equity | Accordion

[11] 2024 Election - Implications on Private Equity & Private Credit

[12] 2024 Election - Implications on Private Equity & Private Credit

[13] 2024 Election - Implications on Private Equity & Private Credit

[14] 2024 Election - Implications on Private Equity & Private Credit

[15] 2024 election outcome scenario: Divided government under Trump; Investors Trump-proof portfolios as risks rise ahead of US election

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