What Trump's 100 Days Will Mean for Market, Taxes and Your Wallet

President Donald Trump’s first 100 days in office have been filled with swift executive actions, including initiating massive federal workforce cuts, drastically scaling back U.S. foreign aid, and unsettling global markets with unpredictable tariffs. However, one of Trump’s ambitions to leave a lasting imprint on the U.S. economy now hinges on a bitterly divided Congress.

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Over the next few months, the political spotlight in Washington will shift toward Capitol Hill. Republicans, holding only narrow majorities in the House and Senate, are trying to pass legislation that would make permanent the individual tax cuts established under Trump’s 2017 Tax Cuts and Jobs Act.

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They are also considering adding new benefits that Trump campaigned on, such as eliminating taxes on tips, overtime pay, and Social Security income, as well as making car loan interest tax-deductible.

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The 2017 tax overhaul stands as one of the major achievements of Trump’s first term. Pledging to cement those tax cuts was a key promise during his reelection campaign. Now, with his proposed tariffs largely on pause for 90 days, making the tax cuts permanent has become a primary focus for Republicans.

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Yet, the sheer cost of extending these cuts, combined with some GOP resistance to increasing the federal deficit, makes the path forward uncertain.

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Mark Prater, a former chief tax counsel for Senate Republicans, told MarketWatch that fulfilling all of Trump’s tax promises would be very challenging. Congressional budget resolutions currently allocate between $4.8 trillion and $5.3 trillion to fund the proposed tax changes, but most of that money would simply extend the existing cuts.

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According to the Tax Foundation, maintaining the individual, estate, and pass-through business tax breaks would cost around $4.6 trillion when factoring in expected economic growth and added debt costs.

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Before any tax bill can reach Trump’s desk, the House and Senate must reconcile their competing budget plans, which differ significantly in how much new debt they are willing to tolerate.

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The House proposes $2 trillion in spending cuts to offset $4.8 trillion in tax cuts, while the Senate’s plan allows for over $5.8 trillion in new borrowing with only minimal spending cuts. Analysts warn that the Senate plan could push U.S. debt beyond 230% of GDP by 2055, heightening risks of soaring interest rates and economic instability.

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Kyle Pomerleau, a tax expert at the conservative American Enterprise Institute, noted that Congress feels more pressure to extend tax cuts than to control spending. Deep budget cuts are especially controversial.

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House Republicans want to slash Medicaid funding by about $600 billion, but this idea faces resistance even within the GOP. In mid-April, a dozen House Republicans warned against cuts that would hurt vulnerable populations, leaving leadership with little room for error.

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Spencer Perlman of Veda Partners predicts that Republicans may eventually accept $400 billion in Medicaid cuts over a decade. These cuts could involve stricter work requirements for certain adults, scaled-back benefits in Washington, D.C., and reversing some Biden-era policies that expanded the program.

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Meanwhile, some Republicans — and even Trump himself — have floated raising taxes on the wealthy, a controversial suggestion given the GOP’s long-standing opposition to tax hikes. Trump recently told Time magazine he would not rule it out, although political realities make it unlikely.

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For everyday Americans, the tax overhaul could have big consequences. A study from the Center on Budget and Policy Priorities (CBPP) found that if the 2017 tax cuts are extended, Medicaid is cut, and tariffs are raised, households in the bottom 60% of income earners could lose an average of $1,870 annually — the equivalent of about four months’ worth of groceries. The poorest households would lose even more, while the richest 1% would gain an average of $25,500.

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Another flashpoint is the state and local tax (SALT) deduction cap. Some House Republicans, particularly from high-tax states, are pushing to ease the SALT limit imposed in 2017. While Senate Republicans remain skeptical, a modest adjustment is looking increasingly likely.

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Adding to the urgency, the upcoming legislation will also need to address the debt ceiling, as the Treasury Department could run out of borrowing authority as soon as July. Folding the debt ceiling hike into the broader tax bill would allow Republicans to avoid negotiating with Democrats.

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Despite Republican hopes that extending tax cuts will boost the economy, Pomerleau cautions that the economic environment today is very different from 2017. Back then, the U.S. was still recovering from the Great Recession, and low demand kept inflation and interest rates subdued. Today, after massive pandemic stimulus efforts, inflation has surged, and government debt is already very high.

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Piling on another $5 trillion in debt could drive up interest rates, make mortgages and loans more expensive, and weaken demand for U.S. Treasury bonds.

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“If Congress borrows another $5 trillion, that's a lot of new supply at a time when demand for Treasurys is falling,” Pomerleau warned. “Interest rates could climb even higher because of it.”

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