3 Key Policy Themes That Will Impact Markets If Trump Wins By Investing.com

With the likelihood of a Trump victory in the upcoming election increasing, Evercore ISI has highlighted three key policy themes that could have a significant impact on markets under a potential second Trump administration.

These themes, drawn from the firm’s ongoing Trump 2.0 series, provide insight into the economic and market implications of Trump’s agenda.

Tariffs, Immigration and Taxes: Evercore notes that Trump’s three biggest macroeconomic policies (raising tariffs, restricting immigration and extending existing tax cuts) collectively point to lower growth and higher inflation.

Evercore ISI adds that “the high fiscal costs of extending the expiring tax cuts leave relatively little room for new tax cuts,” leading to larger structural deficits over the long term. This, combined with more aggressive tariff and immigration policies, results in a “much less pro-growth and more inflationary policy mix than Trump 1.0.”

Deregulation Agenda: Trump’s deregulation approach is expected to boost the profitability of certain sectors, notably the financial sector and the traditional energy sector.

However, analysts say it could negatively impact other sectors, such as healthcare, and create uncertainty for Big Tech. The firm explains that a Trump victory would be “generally positive for financials and traditional energy,” but “negative for certain healthcare sectors and create uncertainty for Big Tech.”

Geopolitical risks: Analysts say geopolitical risks remain high as Trump poses a potential new source of uncertainty.

They explain that while Trump is trying to resolve the ongoing conflicts in Ukraine and the Middle East, US alliances are likely to falter if he challenges traditional allies on economic and security issues.

Evercore ISI also highlights that “decoupling from China is becoming US policy, driven by an active tariff war that is also extending to other areas.”

Analysts stress that Trump and his team would be much better prepared to implement their agenda from day one, with a more favorable legal system that would contribute to a faster and less cumbersome implementation.

They say Reince Priebus, Trump’s first White House chief of staff, summed it up this way: “Whatever Trump wants to accomplish with his agenda, he will be able to do it much more quickly and much less clumsily.”