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Trump 2.0 – The winners and the losers

Possible Trump 2.0 policies suggest they will likely impact various sectors of the economy and specific markets.

Key Policies to Watch

On trade, tariffs of 10% on all imports and 60% on some countries, as well as a possible revocation of China’s PNTR status and the continuation of industrial subsidies, could disrupt the dynamic of international trade. Trump Tax Policy 2.0 is expected to include income and corporate tax cuts, higher personal deductions, doubling repatriated earnings, and increasing estate taxes, all in aim of promoting national economic growth. Monetary policy could be marked by continued interventions by the Federal Reserve, which could impact inflation and interest rates.

Tighter border controls, expulsion of illegal immigrants and reduced immigration spending reflect the administration’s hardline stance on immigration. Furthermore, foreign policy will likely focus on negotiating between Russia and Ukraine, putting pressure on Iran, and reducing participation in multilateral organizations, marking a shift toward unilateral diplomacy.

The potential winners of Trump 2.0

Under Trump 2.0, several sectors stand out as potential winners. Energy markets could benefit from deregulation and greater pressure for energy independence, putting traditional oil and gas sectors in a position for growth. However, oil prices could see mixed results as increased U.S. production could offset global price pressures. Potentially tougher sanctions on Iran and a more gradual Fed approach to rate cuts could introduce counter-risks to this dynamic.

The banking sector could benefit from rising yields and deregulation, which would improve profitability through increased net interest margins. Reflation, driven by expansive policies, could also benefit banks as demand for capital and investment remains strong. Defense companies could see growth fueled by increased defense spending, with potential geopolitical instability underscoring the need for a robust military presence.

Small-cap stocks, which are more U.S.-focused, could thrive amid domestic policies and tax cuts, boosting sectors closely tied to local consumer demand. Gold, which is generally a safe haven, could attract investors looking for protection against potential trade tensions and inflation risks. However, if the U.S. dollar strengthens too much or the Fed takes a cautious approach to rate cuts, this hedge could lose its appeal.

The Potential Losers of Trump 2.0

On the other hand, several sectors could suffer from Trump 2.0 policies. Chinese and Hong Kong stocks could come under long-term pressure due to trade restrictions and geopolitical tensions, and capital could redirect to the Indian and Japanese markets. U.S. consumer discretionary stocks could face headwinds as tariffs increase import costs, which could reduce consumer spending.

The renewable energy and electric vehicle (EV) industries could face challenges as policies now focus on traditional energy sectors, likely reducing government incentives that have supported the growth of renewable energy and technology batteries. European markets, particularly export-dependent economies like Germany, could be vulnerable to trade tensions between the United States and the European Union, which could reduce export potential.

Impact on Big Tech

For Big Tech, Trump’s commitment to deregulating AI could reduce compliance burdens, benefiting AI initiatives and infrastructure growth at companies that invest in data centers. However, tariffs could put pressure on multinational technology companies that rely on global supply chains, particularly if CHIPS Act subsidies are replaced with import tariffs, which would increase costs for technology companies that rely on international manufacturing networks.

Big tech companies could see nuanced impacts from Trump 2.0. Tesla, with Elon Musk’s advisory role, could benefit from favorable government policies, but could also face increased scrutiny. Meta could face increased competition from TikTok if Trump softens his stance on banning TikTok, which would affect user engagement. Apple could face disruptions to its supply chain due to tariffs on Chinese production, while Alphabet could face challenges from antitrust scrutiny. NVIDIA could benefit from expanding AI infrastructure, but remains exposed to risks related to US-China-Taiwan relations, given its reliance on TSMC (Taiwan) for chip production.
Potential changes under Trump 2.0 suggest a mix of opportunities and challenges across different sectors, hence the need to closely monitor policy announcements.

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