Following Donald Trump’s 2024 victory and the Republican control of the Senate and likely the House, substantial shifts are expected across the U.S. economic landscape. With a stronger Republican legislative presence, Trump’s pro-business and deregulatory policies are poised to reshape industries ranging from technology and energy to healthcare and finance. In this article TAMIM’s managing director, Darren Katz explores how Trump’s administration and the Republican agenda are likely to impact these sectors.
Trade Policy and Global Supply Chains
Trump’s “America First” economic philosophy will likely continue to emphasise reducing trade deficits and reshoring production. His administration is expected to increase tariffs, particularly on imports from China, aiming to bring manufacturing jobs back to the U.S. and reduce reliance on foreign suppliers. For industries reliant on overseas production, particularly in technology and consumer goods, this could mean higher production costs. However, U.S.-based manufacturers may benefit from less competition with foreign imports, boosting demand for domestically made goods.
In addition to trade with China, Trump’s administration may adopt a more assertive stance with other trading partners. This approach could disrupt established supply chains, impacting multinational corporations with global manufacturing networks. However, these protectionist measures are intended to bolster American manufacturing, potentially creating new opportunities for U.S. companies that focus on domestic production and supply chain resilience.
Fiscal Policy: Tax Cuts and Deregulation
A primary economic goal for Trump’s administration is corporate tax reduction, which is anticipated to lower business costs and stimulate investment. Corporate tax cuts, combined with further incentives for domestic production, are expected to appeal to manufacturers and energy producers, incentivising capital investment within the U.S. However, these tax cuts may increase the national deficit, potentially raising borrowing costs in the long term, which could have implications for federal spending on public services.
Deregulation is another key focus. Trump’s administration plans to reduce regulatory oversight in sectors such as energy, finance, and healthcare. This could allow companies to operate with fewer restrictions, potentially lowering costs and raising profits. However, it also brings concerns about environmental and consumer protections, as fewer regulations in energy and finance might lead to increased environmental impacts and higher risks for consumers.
Technology and Innovation: Focus on Domestic Production
The technology sector is expected to benefit from Trump’s focus on domestic semiconductor production, particularly through the CHIPS Act, which supports U.S. manufacturing of crucial tech components. Trump’s administration may advance this initiative with tax incentives and lighter regulatory requirements to encourage swift expansion in semiconductor manufacturing. By reducing reliance on foreign suppliers, particularly in Asia, the U.S. aims to strengthen its position in global technology markets.
Trump’s approach to technology will also emphasise intellectual property protection and data security, especially regarding Chinese competitors. His administration’s policy will likely include stricter safeguards to prevent intellectual property theft and protect sensitive information, potentially fostering competitiveness among U.S. tech firms.
In the reshoring push, Trump’s policies aim to incentivise tech companies to bring manufacturing operations back to the U.S., making use of tax incentives and fewer regulatory restrictions. While this may create more jobs domestically, it could lead to higher costs for tech firms accustomed to cheaper foreign production.
Energy Sector: Emphasis on Fossil Fuels
Trump’s administration is likely to prioritise traditional energy sectors, including oil, gas, and coal, through reduced regulatory barriers and incentives for domestic production. By easing restrictions on exploration and drilling, the administration hopes to stimulate growth and lower energy prices. This approach could benefit companies in the fossil fuel sector, allowing them to expand operations with fewer environmental restrictions and reduced compliance costs.
The focus on fossil fuels may create challenges for renewable energy companies, which thrived under previous administrations’ clean energy incentives. Without substantial federal support, wind, solar, and electric vehicle infrastructure may face slower growth. Trump’s approach may nonetheless incorporate some incentives for natural gas, which could serve as a cleaner alternative to coal and align with global efforts to curb emissions without abandoning traditional energy sources.
Healthcare: Market-Driven Approach
In healthcare, Trump’s market-driven strategy aims to reduce regulatory burdens on pharmaceutical companies, healthcare providers, and insurance firms. His administration is likely to ease restrictions on drug pricing and innovation, allowing pharmaceutical companies greater flexibility and potentially accelerating the availability of new treatments.
While Trump may avoid strict price control measures on drugs, which Democrats have historically favoured, his administration will likely focus on removing barriers for healthcare providers, aiming to reduce costs and expand patient access. This could improve profitability for healthcare companies, though it might raise concerns about drug affordability for consumers. Additionally, Trump is expected to support the continued growth of telehealth services, an area that gained prominence during the COVID-19 pandemic and offers expansion potential within healthcare technology.
Financial Services: Reduced Regulation and Tax Incentives
The financial sector stands to benefit from Trump’s deregulatory stance and potential corporate tax reductions. Reduced regulatory oversight will allow banks and financial institutions greater flexibility in lending practices, which could increase profitability by cutting compliance costs. By prioritising corporate tax cuts, Trump’s policies are likely to enhance financial institutions’ net income, enabling them to reinvest in growth opportunities.
While deregulation may benefit financial institutions, it could also heighten risks related to financial stability, particularly if there is reduced oversight on lending practices. Trump’s administration may indirectly influence interest rate expectations through aggressive fiscal spending, which could drive up borrowing costs if the national deficit grows.
Industrial and Consumer Sectors: Infrastructure and Trade Policy
Infrastructure investments under Trump are expected to focus on traditional projects such as highways, bridges, and defence spending, rather than green infrastructure. This approach will benefit the construction, engineering, and defence sectors, as these industries supply essential materials and services for large-scale infrastructure projects.
For consumer goods and retail, Trump’s tax cuts could lead to increased disposable income, which may stimulate consumer spending in retail and electronics. However, his trade policies could increase costs on imported goods, potentially raising consumer prices in stores. Retailers reliant on global supply chains will need to navigate these tariffs carefully to protect profit margins.
The TAMIM Takeaway
The re-election of Donald Trump is set to reshape the U.S. economy across multiple sectors. Trump’s policies focus on deregulation, tax cuts, and support for traditional industries like fossil fuels and manufacturing. While these strategies may boost short-term growth, they bring challenges, particularly in the areas of trade, environmental impact, and regulatory oversight.
For investors, aligning portfolios with Trump’s pro-business policies may provide opportunities in fossil fuels, technology, financial services, and infrastructure. However, a cautious approach to sectors reliant on international supply chains or renewable energy may be prudent, as these areas may face headwinds under the new administration. TAMIM Asset Management maintains a balanced investment strategy that adapts to Trump’s economic policies, capitalising on growth opportunities in key sectors while safeguarding against potential volatility.