The stage is set, the self-tanner is more orange than ever, and the star of the show has arrived. Donald Trump was elected the 47th President of the United States on November 5, 2024, winning both the popular vote and the Electoral College. Largely fueled by Rural America, President Trump’s victory sent shock waves worldwide, impacting both voters and financial markets. The equity and crypto markets seemingly embarked on a love story with the president-elect, as his potentially business-friendly tax policies and the most pro-crypto treasury stance propelled these asset classes to immediate gains. However, not all asset classes were enchanted by Trump’s victory. Concerns over the president-elect’s plans to Make America Healthy Again and potential healthcare reforms have caused Big Pharma and the healthcare sector to tumble, leaving many wondering, “Is it over now?”
It is a fool’s errand to try and predict what the next four years will hold, but we can make some forecasts about financial markets and sector performance based on Trump’s policy statements before, during, and after the election. Before diving into those projections, however, we must first revisit the president-elect’s first term in office as a prequel.. Are you ready for it?
The First Era
Donald Trump served as the 45th President of the United States from 2017 to 2021, defeating Democratic nominee Hillary Clinton in a historic election. Trump was the first president without prior experience in public office or the military, bringing a unique background in corporate America and reality television to the role. Comparing the red and blue maps of the United States from 2016 to today reveals a strikingly similar picture, with the notable exception of the swing state of Nevada. Shifts in the Electoral College reflect changes in population, as many Americans have moved away from traditionally blue states like California, New York, and Illinois to traditionally red states such as Montana, Texas, and Florida.
Source: AP Poll
Diving into the key events of Trump’s first administration, there are a few notable policy shifts that are likely to set the stage for the direction of his next term. Perhaps, his most significant fiscal policy shift, the Tax Cuts & Jobs Act of 2017 lowered individual and corporate tax rates across the board that the Biden administration has largely left untouched. The act increased the standard deduction from $6,350 to $12,000, raised the child tax credit by $1,000, reduced corporate tax rates from a range of 15%–39% to a flat 15%, and introduced the Opportunity Zone program.
Source: CNBC
While these policies reduced the tax burden for many Americans, some of President Trump’s other policy decisions were generally viewed as less favorable for the environment. Known for his critical stance on international climate agreements, Trump withdrew the United States from the Paris Agreement on Climate Change. At the same time, he expanded domestic oil and natural gas production in U.S. waters and near public lands while encouraging private investment in traditional energy resources.
Frustrated by large trade imbalances with China and Chinese infringement of U.S. intellectual property rights, Trump initiated a trade war with one of America’s largest trading partners. He imposed significant tariffs on Chinese goods, costing American households an average of $625 annually and increasing tax collections by $200 to $300 per household. Notably, his successor, Joe Biden, maintained most of these tariffs, with the exception of a few policies related to the EU and Japan.
One of the biggest casualties of these tariffs was American agriculture. A U.S. Department of Agriculture study found that retaliatory tariffs led to a $27 billion decline in U.S. agricultural exports between mid-2018, when the tariffs were introduced, and the end of 2019. The federal government provided $23 billion to U.S. farmers through the Market Facilitation Program to mitigate the impact on flat commodity markets and low export volume.
Who was The Man?
It is not uncommon for the incoming president to be compared to the outgoing one. So, as we compare Donald Trump with Joe Biden, we might be asking who was our fearless leader and our alpha type? Looking at the numbers behind each administration, we see a varied picture. While inflation was certainly higher under Biden, Trump added more to the federal debt level than the outgoing President. Both presidencies were impacted by the effects of the COVID-19 pandemic and despite varied economic conditions GDP growth was similar under both administrations. The S&P 500 saw greater gains under the former business executive, Donald Trump, and more recently the S&P 500 has rewarded investors by returning 18% since his re-election. While there historically isn’t a strong correlation between the political party in office and the performance of the stock market, Trump’s tax plans for corporate America have created an early indicator of what might be to come in the next 4 years.
| Trump | Biden | |
| GDP Growth | 2.3% | 2.2% |
| Inflation | 1.9% | 5.4% |
| Average Unemployment Rate | 5.04% | 4.11% |
| S&P 500 Return | 16.3% | 12.6% |
| Increase in Federal Debt Level | 39% | 29% |
| Average Gas Price | $2.57 | $3.60 |
Era 2.0
But on Wednesday, after the election was called, we saw it Begin Again. President Trump’s second term is likely to be a bigger show with lots of friendship bracelets exchanged this time around. There are several key aspects to Trump’s Policy 2.0 plans that financial markets will likely be paying close attention to. Below is a summary of his many and varied fiscal policy intentions floated during his election campaign:
- Lower corporate income tax from 21% to 20%
- Lower corporate income tax rate to 15% for those who make their products in the U.S.
- Increase child tax credit to $5,000
- Exempt Social Security benefits from taxation
- Exempt tip income & overtime pay from taxation
- Create a deduction for auto loan interest
- Create a tax credit for family caregiver
- Eliminate green energy subsidies from Inflation Reduction Act
- Tax large private university endowments @ 1.4%
- Impose universal baseline tariffs on US imports of 10% to 20% and/or reciprocal tariffs
- Impose a 60% tariff on all US imports from China
Both Donald Trump’s and Kamala Harris’s plans were likely to add to the federal deficit with Vice President Harris’s plan likely adding $3.95 trillion to the federal deficit and President-elect Trump’s plans adding $7.75 trillion. It will be interesting to watch the possible impact of Trump’s new Department of Government Efficiency (DOGE) led by billionaire technologists Elon Musk and Vivek Ramaswamy. The pair aim to cut at least $500 billion in annual spending, but there are lingering questions about how DOGE recommendations to control federal spending will be implemented and sustained.
Perhaps one of the most widely discussed policy proposals of this past election has been Trump’s position on tariffs. Economists estimate that if the tariffs are raised to his proposed level, it will add 0.9% to the rate of inflation with increased costs being passed on to consumers. The tariffs are also expected to cost U.S. Farmers somewhere between $0.9 – $1.4 billion. However, many believe Trump’s tariff plans are just a negotiating tactic part of a broader geopolitical and economic plan. For example, Trump recently announced that he will immediately slap 25% tariffs on all goods imported from Canada and Mexico until the shared borders are secured to prevent illegal drugs and immigration into the United States.
In last month’s article, we discussed some of the likely stock market winners and losers under a Trump regime. Those “winners” have experienced large equity gains in associated companies over the past few weeks. Elon Musk’s Tesla has experienced a 40% increase since Trump’s victory and Bitcoin has soared to almost $100,000 causing sparks to fly across financial markets. Nuclear energy, banks, and defense and weapons companies have also shown gains in recent weeks.
In the end, we know all too well that “nothing safe is worth the drive.” As we embark on Trump Era 2.0- Donald’s Version, the world waits with bated breath, balancing hopes for economic prosperity with concerns over inflation, global relations, and deep state countermeasures. His proposed fiscal policies, the bold strokes of a self-proclaimed disruptor, could “paint the town blue,” but at what cost? Some industries are singing their “Love Story” with large market gains, while others brace themselves, wondering if perhaps “we are never ever getting back together” with normalcy.
As we analyze the past to forecast the future, let’s remember that every stage of history is unpredictable. We’re all just “dancing with our hands tied,” hoping to weather the storm. Whether you’re cheering or jeering, this Trump Era 2.0 promises to be remembered “all too well.” It will either unite us or drive us further apart. As Abraham Lincoln declared, “A house divided against itself cannot stand… I do not expect the Union to be dissolved. I do not expect the house to fall, but I do expect it will cease to be divided. It will become all one thing or all the other.”
