Donald Trump has become the first US president to be elected in non-consecutive terms since Grover Cleveland in 1893. If there’s one thing that we have learned since he was elected the first time, it is to expect the unexpected. 

So, what does 2025 hold for the Americas? The US economy continues to expand between 2% and 3% annually, and many economists believe that the Federal Reserve has successfully used monetary policy to deliver a soft landing while taming inflation. Nonetheless, the economic picture is still murky at best. 

As we move into 2025, these key factors are poised to shape both foreign and domestic investment across the Americas.

Broad tariff implementation

If the Trump administration follows through on its pledge to implement across-the-board tariffs, it could spark increased investment in the US, as businesses look to avoid import duties. However, broad tariffs could also lead to inflation, hurting consumer demand and potentially dampening overall investor enthusiasm.

In my view, congressional oversight will likely limit the administration’s ability to quickly implement extreme or blanket tariffs. Mr Trump will likely uphold the US-Mexico-Canada Agreement, which his first administration helped negotiate. This combination of restrained tariffs and trade agreement adherence should boost interest and investment in North America, with labour-intensive processes locating south of the US border and capital-intensive operations going to the US and Canada. 

Central and South American countries may also receive comparably favourable treatment under the new administration. During his first term, Mr Trump left in place trade agreements with a number of the region’s countries, and he may use trade as a bargaining chip to stem the flow of illegal immigration. 

Federal taxes and subsidies

Many of the 2017 Tax Cuts and Jobs Act’s tax cuts are scheduled to expire in 2025, and while most corporate decisions are not made based on corporate tax rates alone, they can tip the scales. Highly profitable, lightweight sectors like pharmaceuticals are particularly sensitive to these changes and could see a shift in investment strategy if these cuts expire. Additionally, should the Inflation Reduction Act (IRA) be repealed, many green projects would be derailed, leading to lost opportunities for investment and job creation.

I predict Mr Trump will extend corporate tax cuts and largely leave the IRA intact, particularly given that many IRA-funded projects are located in traditionally Republican states. It’s possible the programme may be revised to remove certain elements, such as diversity, equity and inclusion and prevailing wage clauses. However, given the political landscape, Trump is unlikely to fully repeal the IRA and alienate his base by pulling the investment rug from under their feet.

Regulatory environment

Mr Trump ran on a platform of reducing environmental regulations to make it easier, faster, and cheaper to execute large projects. Although this regulatory rollback will likely have deleterious impacts on the environment, it could simplify the development process for projects previously hindered by extensive red tape. Mr Trump has suggested continued reduction of federal oversight of wetlands and smaller water bodies to spur economic growth and ease burdens on businesses. By streamlining approval processes, incentivising large-scale energy projects and limiting state-level environmental barriers, these policies may also accelerate the progress of much-needed energy projects (such as pipelines, new transmission lines, more electricity generation) in order to advance the North American manufacturing renaissance and power-hungry data centres that enable the explosion in artificial intelligence.

It is uncommon for a change in the US administration to have such a momentous and significant impact on both the domestic and global economy. Traditionally, Republican and Democrat administrations come and go with moderate shifts in government policy. But, there is nothing common or moderate about Donald Trump. While it seems strange to make predictions for 2025 that are so dependent on one man’s policies, his willingness to use his power to affect momentous change makes it folly to do anything else.

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This article first appeared in the December 2024/January 2025 print edition of fDi Intelligence