5. Trump’s 3 D’s: DOGE, Deregulation, and Drugs

Innovation and change

2 min read

5. Trump’s 3 D’s: DOGE, Deregulation, and Drugs

We do not expect President Trump’s reform agenda to slow down in his second year. We see ‘three Ds’ at the top of President Trump’s programme: DOGE, deregulation, and drug pricing. It is anticipated that other countries will follow closely and may look to adopt similar approaches in their respective countries in due course.

DOGE
Trump had set up the Department of Government Efficiency (DOGE) to reduce wasteful government spending, with Elon Musk initially targeting USD2tn in savings. This was later scaled back to USD1tn and then USD150bn by the end of April. Although Musk departed in late May, taking some of the noise away from DOGE, its work continues. The estimated savings generated by the DOGE up until mid-October 2025 are put at USD214bn⁷. That represents a combination of asset sales, contract and lease cancellations and renegotiations, deletion of fraudulent and improper payments and workforce reductions. Broad deregulation remains an important theme of the Trump administration and is seen as central to achieving the objective of 3% real economic growth.

Deregulation
One important aspect of the Trump administration’s policies is deregulation (Figure 6). With a particular focus on housing and de-zoning/re-zoning land. De-zoning focuses on removing planning restrictions altogether and re-zoning focuses on changing zoning regulations. Zoning restrictions can often be a drag on the availability of housing and commercial space.

Deregulation in this area could involve a loosening of residential density limits, allowing more apartments/homes to be built, easing shortages and lowering housing costs. For businesses, an easing of zoning regulations can allow, for example, more rapid development of new businesses in key areas. One study finds that if all metropolitan areas adopted the lowest level of land use regulation (found in Texas), US GDP would increase by around 3% or around USD1tn per year.⁸

Another important piece of financial market legislation is the Genius Act (Guiding and Establishing National Innovation for US Stablecoins Act), which came into US law in July 2025. This allows the establishment of stablecoins typically backed by US Treasuries. This will lead to a significant increase in the number of transactions and hence reduction in costs for cross-border transfers and improved safety and regulation for consumers. It is expected that stablecoins will be able to disrupt the cross-border payment systems, especially in the US, where consumers pay a lot for transfers and often with large time delays. We see that with further enhancement this technology could lead to increased tokenisation of stocks, illiquid assets and eventually 24/7 trading of investment assets.

Drug pricing
Drug pricing has, for a long time, been a contentious issue not just in the US but globally. US drug prices are generally higher than those in the rest of the world, especially for relatively new, branded drugs. President Trump’s view is that drug prices are too low in other markets around the world, especially in European markets, with tariffs (on Switzerland in particular) designed to offset that difference. The Trump administration believes that US drug prices need to remain high in order to incentivise greater investment in research and development. There is general support for that argument in other economies, notably the UK. However, there is a reluctance to see prices rise for the purchasers of drugs, whether they be the end consumer, healthcare providers or the state. In the US, the TrumpRX plan is designed to allow consumers to buy drugs directly from pharmaceutical companies, but it remains to be seen how effective this will be.

Furthermore, patent expirations (generic drug prices are lower in the US than branded drug prices) and the weak pipeline of new drug approvals puts pressure on drug company margins and may further stifle investment in new drugs. Issues relating to drug efficacy (of immunisations and generic widely used drugs such as paracetamol) means navigating developments in the healthcare industry will be no easy task in 2026. We favour exposure to smaller, innovative companies that are in a position to lead new drug development rather than larger, established healthcare companies.

Action for investors:

Look for opportunities in the 3D's: private sector provision of formerly government services; real estate development in selected residential and commercial areas as a result of de-zoning/re-zoning; and innovators in the healthcare industry.
The Genius Act may be a threat to existing cross border payment companies and banks but will be an opportunity for companies in the stablecoin arena.
Be wary of changes in the drug pricing landscape and the impact on investment and innovation.
Other economies (such as the UK and some emerging economies) may look to copy DOGE-like initiatives, so look for opportunities there.

⁷ https://doge.gov/savings
⁸https://www.hoover.org/research/reforming-us-commercial-land-use-regulations-could-increase-gdp-1-trillion-year

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