The world’s financial markets are becoming increasingly receptive to the possibility of former President Donald Trump securing a second term in the White House. This shift comes after he outperformed President Joe Biden in a debate and survived an assassination attempt.
The so-called “Trump Trade” is gaining momentum as investors brace for the economic and market implications of Trump potentially becoming the 47th President of the United States.
But what is the Trump Trade and what does it entail for the market?
The Trump Trade refers to the market’s behavior and investor strategies in response to the potential return of Trump to the presidency. During his previous term, Trump was notably business-friendly, as seen with his significant achievement in enacting the Tax Cuts and Jobs Act (TCJA) of 2017, which reduced the federal corporate income tax rate from 35% to 21%. This law allowed at least 87 firms to pay very low effective tax rates, including Netflix and Salesforce, some of which paid less than 5% between 2018 and 2022. Twenty-three firms paid zero or less federal income tax over that period, according to the Institute on Taxation and Economic Policy.
In a June meeting with around 100 business executives, including JPMorgan Chase CEO Jamie Dimon and Apple chief Tim Cook, Trump promised to further reduce the corporate tax rate to 20%. He also pledged to make the 2017 tax cuts permanent and renew tax cuts for individuals and small businesses.
A second Trump presidency would likely lead to deregulations and increased tariffs on foreign imports. Following Biden’s quadrupling of tariffs on Chinese electric vehicles, Trump advocated for similar measures on various other products.
During the first 100 days of his presidency, Trump overturned several bills related to consumer and labor protections and rescinded regulations in various areas, including food safety and environmental rules. Over 100 environmental regulations were rolled back during his first term.
Potential winners of a second Trump term include healthcare, banking, cryptocurrency, and oil stocks. Trump has recently positioned himself as a supporter of Bitcoin, with his campaign accepting donations in multiple cryptocurrencies. He has expressed a desire to have all Bitcoin mined in the U.S. and plans to speak at the Bitcoin Conference in Nashville.
The oil industry is also expected to benefit, having supported Trump in both his 2020 and 2024 campaigns. In May, it was reported that Trump offered to dismantle Biden’s pro-environment and EV policies in exchange for $1 billion in campaign contributions.
Goldman Sachs has identified 34 U.S.-based stocks that could outperform in a Trump presidency, including Charter Communications, T-Mobile, Target, Lowe’s, and Wells Fargo.
Tesla is another possible beneficiary, despite Trump’s tough stance on EVs. Tesla CEO Elon Musk, who formally endorsed Trump after the recent assassination attempt, has become a proponent. Musk has also donated to the pro-Trump America PAC. Analyst Dan Ives describes a Trump presidency as “bullish” for Tesla stock but negative for the EV industry overall.
A Trump presidency would also likely boost Trump Media and Technology Group, which owns Truth Social, Trump’s social media platform.
However, potential losers under a Trump administration are expected to be companies focused on clean energy, such as solar firms and those heavily reliant on foreign trade or operating from abroad.
Trump’s critical stance on clean energy and his opposition to Biden’s Inflation Reduction Act—which provides tax credits for solar panels and electric vehicle purchases—could harm the solar and EV sectors if these incentives are canceled. The Invesco Solar ETF, SolarEdge Technologies, SunPower, First Solar, and SunRun stocks have recently seen declines.
Additionally, Vestas Wind Systems and Ørsted A/S, companies involved in wind energy, experienced stock drops. Trump has pledged to halt offshore wind projects and has made numerous unsubstantiated claims against wind energy.
This article was contributed to by Vinamrata Chaturvedi and Rocio Fabbro.