As we look ahead to a second Trump administration, many investors are weighing how the shifting political and economic landscape will affect different sectors of the U.S. economy.
While the Trump era was marked by deregulation, tax cuts, and an “America First” agenda, it’s likely that these themes will continue to shape the economy in the coming years.
For investors, understanding which industries stand to benefit is key to making informed decisions.
In this article, we’ll explore the sectors most likely to thrive under President Trump’s policies, from the booming energy markets to the resurgence of American manufacturing, and even the rise of digital currencies.
We’ll also highlight which sectors may struggle in an administration that favors deregulation, tariffs, and local production over reliance on imports. Whether you’re a seasoned investor or new to the market, knowing where to look and where to avoid could help you position your portfolio for success in the years ahead.
Let’s dive into some of the key sectors that could flourish, as well as those that might face headwinds under the Trump Trade.
1. Oil and Gas: The “green” shackles are off; more deregulation and drilling will bring more investment and revenues to the energy sector, especially Liquified Natural Gas. Many deals previously not on the table under a Democratic administration will be rushed through in the next four years. Can the Keystone Pipeline return? What about the gas pipelines in the states of New England? With a friendlier Environmental Agency, more deals will get regulatory approval.
2. Defense: Trump will emphasize a more robust military, thus increasing defence spending. Defence spending is also crucial in boosting the local economy and returning many Americans to work. See the Defense Department invest more in new-fangled sectors like the Space Force, Ai, Drones, and lasers than traditional Tanks and Aircraft carriers.
3. Mining: not just traditional coal mining but more selective mining of rare earth minerals, iron ore, and uranium, and plan vanilla gold and platinum. More local manufacturing means more demand for raw materials. An American first posture means imports of critical materials like uranium from Russia will be looked at as an opportunity to make import substitutions.
4. Crypto and Digital Currency: Trump is the first crypto-friendly President. Crypto will be lightly regulated, allowing that sector to thrive and focus on utility projects. Again, an SEC that is friendly to the crypto industry will see Spot ETFs and other crypto derivatives be allowable even to retirement accounts.
5. Manufacturing: America First, can mean tariffs; ultimately, more manufacturing is returning to America. Tariffs eliminate the advantage of offshoring manufacturing. What would happen to the economy of Louisiana or Wisconsin if Foxconn decided to open a plant in America to assemble iPhones? It envisages many foreign manufacturing concerns opening up factories in America to avoid trade tariffs
6. Banking and Finance: Again, the light regulatory hand on banking means less cost and more risk-taking will be encouraged. The regional and smaller banks will do well. Mergers and acquisitions will increase as a more receptive FCC, SEC, and Trade Commission allow bigger deals. Wall Street will see more deals and more advisory income
7. Airlines, Transportation, and Logistics: If America drills more oil and the price per barrel falls, the airlines and logistics companies will see a fall in their highest costs, which are Jet fuel and diesel, respectively. This fall in fuel costs will boost air and maritime travel.
8. Nuclear power: The Trump administration will also need more clean energy in the mix, and it will look to license smaller nuclear power plants like those recently approved to power large data centres. Look to see nuclear take a massive chunk of the market share from coal
9. Law and Order: Trump, as the president of Law and Order, will favour companies involved in managing private prisons, providing personal protective services, and supporting ICE and private security. The administration will also look to cut costs by outsourcing security to private concerns
What trades should you avoid?
Anything linked to government subsidies. Thus, clean power, solar, and wind, which are only profitable due to government subsidies, will not be a good bet. Keep in mind that there is a place for companies that are profitable without government subsidies.
This negative sentiment on companies enjoying subsidies will extend to any companies whose model depends on subsidies to offer medical care under the Affordable Care Act or administer Student loan forgiveness
Any business based solely on imports from China, Mexico, etc
Imports will not be encouraged under Trump, who favours a stronger dollar and local manufacturing
Overall, the US economy will remain the world leader. If unsure about specific sectors, then speak with your advice and look to gain exposure to the American market by investing in low-cost index funds or ETFs thet invest in the US market
