The U.S. election on Tuesday will have far-reaching economic consequences, ranging from how Americans are taxed to how the country trades with the rest of the globe.
Democrat Kamala Harris and Republican Donald Trump present starkly different policy visions that will also shape the flow of immigrants into the labor market and make-up of the energy supply that powers industry. Their differences will influence the prices consumers pay for everyday goods and the borrowing costs households and businesses face on debts.
Much will depend not only on who wins the White House but also which party controls Congress. That’s especially so for tax proposals, which must be approved by lawmakers. Still, the president has independent authority to take sweeping actions, particularly on trade and immigration.
Donald Trump and Kamala Harris
Stephen Maturen/Getty Images and/Photographer: Stephen Maturen/Ge
Here’s a look at five of the most significant economic impacts of the election outcome.
Taxes
Trump has put lowering income taxes front and center of his campaign. He’s promised to extend tax cuts passed during his first term — otherwise set to expire at the end of next year — and also further reduce corporate income taxes. On the campaign trail, he’s embraced additional ideas for tax cuts, including ending taxation of tips, overtime pay and Social Security benefits. He claims the revenue loss would be partially offset with new tariffs on imported goods.
Harris has only committed to extending the 2017 Trump tax cuts for those earning less than $400,000 and says she would roll back the expiring tax cuts for the richest Americans. She has pledged to raise the corporate income tax rate and impose a minimum tax for billionaires. She would expand child tax credits for families and offer breaks for smaller businesses.
The impending expiration of the 2017 tax cuts likely forces action on tax legislation next year. Neither party wants to take responsibility for tax increases on the middle class, so tax policy will dominate Congress in the next session.
The make-up of Congress will be critical to the outcome. An election sweep in which the same party wins control of the presidency, Senate and House would clear the way for a partisan plan. But divided government would force a negotiated deal.
Trade
The biggest potential shock to business would come from Trump’s plan to sharply raise tariffs to try to force manufacturers to move production to the US. The Republican has called for minimum tariffs between 10% to 20% on all imported goods, rising to 60% or higher on imports from China.
Bloomberg Economics projects the maximal version of the plan, with the across-the-board tariff at 20%, would lower US GDP by 0.8% and add 4.3% to inflation by 2028 if China alone retaliates. If the rest of the world also retaliates, the blow to growth would be greater, lowering US GDP by 1.3%, but would add just 0.5% to inflation because of the weakened US economy.
Harris has signaled broad continuity with the trade policies of the Biden administration and also has warned Trump’s proposals would amount to a “national sales tax” on consumers.
Both candidates have said they would block a proposed Japanese takeover of United States Steel Corp., signaling a consensus on a hawkish attitude to foreign investment in sensitive sectors. The president has considerable unilateral authority to act on trade policy.
Immigration
Trump has promised the biggest deportation of unauthorized migrants in history, a move that would immediately hit sectors such as construction, hospitality and retail that rely heavily on immigrants — with both legal and illegal status in the country. Economists say such a move would jolt the labor market, disrupt business and cost billions of dollars to carry out.
Harris would take much more modest steps. She promised to re-introduce legislation clamping down on illegal border crossings, a policy that would require bipartisan support in the event of a divided Congress after the election. The president has wide-ranging powers on immigration.
Energy
Trump has adopted the motto “drill, baby, drill.” He promises to cut down on regulation of oil, natural gas and coal production and promises to make more federal land available for fossil fuel production, arguing that will bring down costs. The former president also says he will “terminate” Biden administration policies that offer subsidies to boost green energy production.
Harris leans into a clean-energy transition. The vice president has pledged to lower household energy costs but her agenda is committed to tackling the climate crisis through clean energy and protecting public lands.
Deficits
If either candidate has their way, U.S. budget deficits will go up, analysts say, but the jump would be nearly twice as big under Trump. Larger deficits typically mean higher interest rates and borrowing costs, for both households and businesses.
Harris’s campaign plans would increase the deficit by as much as a cumulative $3.95 trillion over a decade while Trump’s would drive up the deficit by as much as $7.75 trillion, according to estimates by the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group.
So far, investors appear sanguine on the outlook for U.S. fiscal policy regardless of who wins. Appetite for purchasing Treasury bonds has held up even as the U.S. annual deficit for the fiscal year ended Sept. 30 rose to $1.83 trillion from $1.7 trillion the previous year.
Still, some analysts warn that an unsustainable fiscal trajectory risks sparking market volatility. U.S. debt is already set to reach 99% of GDP this year. Bloomberg Economics estimates that Trump’s tax cuts could take it to 116% in 2028, and even under Harris’ more conservative proposals it would rise to 109%.
A divided government, in which the opposition party controls at least one chamber of Congress, could rein in deficits since Congress must approve both spending and taxes.
The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.
The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.
In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.
President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.
The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings.
Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.
Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.
Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed.
The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.
Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition.
Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time.
“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said.
One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load.
“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai.
Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies.
“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.
However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area.
“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai.
As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales.
“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai.
While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves.
“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”