What President-Elect Trump May Mean for Markets

Those who are disappointed by the election’s outcome may be cheered to learn that stock markets have historically risen under both Democrats and Republicans during election years. And with the deficit at record levels and Congress almost evenly split, Trump may find he doesn’t have the funding or the political support to push through some of his grander proposals.   

That said, Trump did float a number of policies while campaigning that could have an outsized effect on certain industries if he can get them enacted. Here’s a look at what the future might hold under a second Trump presidency.  

Buy American. Former President Trump has been very vocal about his desire to impose tariffs of 10% to 20% on all goods manufactured overseas and imported into the US. He’s also floated the idea of 60% tariffs on goods produced in China and 100% tariffs on goods produced in Mexico.  

Domestically-produced steel, semiconductors and automobiles are among the products that could have a pricing advantage over competitors’ foreign-produced goods. Investors should be sure to investigate where an American company’s suppliers source their goods as the suppliers may need to have American-made parts as well to dodge the tariffs. Conversely, US companies that sell many of their products internationally, like Apple, could come under pressure if foreign countries enact retaliatory tariffs on American exports.  

Buy banks. There’s also a risk that Trump’s new tariffs trigger inflation if foreign producers of imported goods pass the cost of the tariffs on to US consumers. Prices may also rise if domestic manufacturers opt to increase prices instead of undercutting the prices charged on tariffed foreign goods.    

Inflation typically results in higher interest rates and higher borrowing costs. Higher interest rates could benefit financial institutions, like banks, which fund themselves using short-term debt and make loans with long-term maturities. Conversely, higher interest rates could hurt companies selling high-priced products that typically require debt financing in order for customers to afford the purchase. For example, buying or renovating a home could get more expensive if interest rates on home mortgages or home equity loans rise. The same would hold true for anyone funding a car purchase using an auto loan.     

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Buy big energy. Former President Trump has been a strong supporter of the oil and gas industry. It’s widely believed that he’ll roll back environmental regulations and hasten permitting, which should help the energy industry drill baby drill. He has also threatened to rescind any unspent funds earmarked for climate provisions under the Biden administration’s Inflation Reduction Act, which he has railed against as “meaningless Green New Scam ideas.” If he’s successful, manufacturers of electric vehicles, batteries and solar panels would find themselves operating in a tougher environment.  

Buy crypto. This summer Trump came out in full support of cryptocurrencies, like bitcoin. He believes the US should become the crypto capital of the planet and even launched his own crypto business, World Liberty Financial. The Trump campaign accepts Bitcoin donations and has its own NFT trading cards.  

Trump has stated that the US should stockpile Bitcoin, just like it holds gold bars, and he doesn’t believe the Federal Reserve should create a digital currency. He would undoubtedly not renominate SEC Chair Gary Gensler, who has been a crypto critic deriding the lack of regulation in the industry. Bitcoin has risen roughly 60% this year and would likely continue to benefit under President Trump along with crypto miners, crypto exchanges and other industry participants.  

Buy Consumer Discretionary stocks. Trump would like to extend the tax cuts included in the 2017 Tax Cuts and Jobs Act. Many of them are due to expire after 2025. Moreover, he’d like to lower the corporate tax rate to 15% down from 21% and he’d like to end taxes on Social Security benefits and tip income. Consumers who have money in their pockets tend to spend it. That could be good news for a wide variety of consumer stocks, like retailers and restaurants.  

Work with a financial advisor. Elections and legislative changes are an excellent example of why a financial plan is not a “set it and forget it” proposition. It’s a living thing, an evolving strategy that needs to change as things change in the world and in your own life. A strategically focused advisor can help to keep your long-term goals on track through every change in the markets and every phase of life. 

We’re happy to answer any questions you may have about how the presidential election will affect your personal finances or your business, and share how we can help you to create a financial strategy in alignment with your specific goals. Contact us for a complimentary consultation on our website at whzwealth.com, or give us a call at (860) 928-2341.    

Authored by Principal/Managing Partner Laurence Hale AAMS, CRPS®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.