With former President Donald Trump’s election victory, the United States is preparing for a new administration and a new approach to the world.
While it was still unclear Wednesday morning whether the House will remain under Republican control, Trump’s party has won both the White House and a potentially sizeable majority in the Senate. If the House stays red — as seemed increasingly likely Wednesday morning — Trump will begin his new administration with a trifecta, giving him an easier path toward enacting his bevy of campaign promises.
Here’s what that would mean for stocks, trade, and the broader U.S. economy.
The stock market
To start, expect portfolios to be largely up this year. According to Fidelity, which cited data collected over the past 74 years, stocks have averaged returns of 9.1% in election years. And major indexes — from the S&P 500 to the Nasdaq-100 and the Dow Jones Industrial Average — are all up this year.
Trump’s presidency is expected to impact some stocks more than others, including oil and gas stocks, as well as cryptocurrencies and bank stocks.
He’s promised to expand oil drilling on his first day in office, continuing a years-long trend that has been maintained under both his first term and President Joe Biden’s administration. The U.S. is producing more oil and natural gas than any other country in the world.
Trump has routinely embraced the oil and gas lobby, reportedly offering a quid-pro-quo to oil executives in April to reverse restrictions on drilling in the Alaskan Arctic and do away with rules freezing permits for liquified natural gas and restricting tailpipe emissions.
Bitcoin reached an all-time high Tuesday night as Trump’s victory came into focus, passing $75,000. The former president had positioned himself as a “crypto candidate,” actively embracing digital assets as part of his campaign, pledging to fire crypto-skeptic Securities and Exchange Commission Chair Gary Gensler, and establish a national Bitcoin reserve.
A Trump-backed crypto project, World Liberty Financial, saw a surge of purchases as the election came to an end, reaching 1 billion tokens sold, although it remains well below its goal. Ethereum and Solana also grew on Trump’s win, as did memecoins like DOGE and Shiba Inu.
Bank stocks — including Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), and Goldman Sachs (GS) — were all up Wednesday, thanks to the expectation that a Republican administration will lean toward deregulation. That could include a pullback on oversight from the Consumer Financial Protection Bureau.
There are also the handful of stocks that benefit from a close relationship with Trump.
Tesla stock was rising — and may continue to do so — thanks to CEO Elon Musk’s relationship with Trump, while his own Trump Media and Technology Group was making similar gains (for now).
Phunware (PHUN), which built the app for Trump’s 2020 presidential campaign, was up 17% in trading Wednesday, while right-wing social media website Rumble was making its own gains.
A hit to trade
“The most beautiful word in the dictionary is tariff,” Trump said last month during an on-stage interview at The Economic Club of Chicago. “It’s my favorite word.”
And he really means that.
Between 2018 and 2020, the Trump administration raised levies on U.S. imports from China by more than 500%. Those goods represented more than a fifth of everything that Americans purchased abroad, Quartz reported in 2020. Prior to Trump’s trade war, U.S. tariffs were among the lowest in the world, averaging about 1.6%.
On the 2024 campaign trail, Trump proposed raising duties on imports from China by as much as 50%, to 60% in total, while adding duties of 10% to 20% against products from the rest of the world. He’s also talked about a “100% tariff” on countries that “leave” the U.S. dollar, and tariffs of as much as 2,000% on foreign-made vehicles.
Read more: The truth about Donald Trump’s tax and tariff plans
Trump’s tariffs could, by some estimates, add between $1,700 to $7,600 in annual costs to American households. According to the Institute on Taxation and Economic Policy (ITEP), his potential tariff hikes would outweigh the effects of any tax cuts he’d institute for 95% of American households.
Late last month, he put his support behind a reciprocal tariff on any country that slaps its own duties on the U.S. His tariffs are expected to incite multiple trade wars as other countries retaliate to protect their own industries, likely reducing U.S. exports and disrupting global supply chains. And for companies that depend on imported parts or raw materials, higher prices could put them out of business.
Trump has denied that Americans would bear the weight of tariffs, arguing instead that it hits foreign companies who ship products to the U.S. However, companies generally pass those higher costs on to consumers by raising prices — which many plan to do.
“If there are 10% to 60% tariffs that get enacted on all of our trade partners, clearly that’s going to create some level of disruption,” Compass Diversified Holdings (CODI) CEO Elias Sabo said on a recent earnings call. “You know, there is no way that any company can absorb those kind of tariff increases.”
The U.S. economy
A major goal of Trump’s first year will be getting Congress to renew his 2017 tax cuts and pass a number of the other proposed tax cuts he’s touted, including an end to taxes on Social Security and lower corporate taxes. His massive tariffs are also on the horizon.
He also plans to deport millions of undocumented immigrants, targeting between 15 million and 20 million people, according to CNN, although the latest government estimates put that figure at 11 million as of 2022. According to the Peterson Institute for International Economics (PIIE), some 8.3 million undocumented immigrants participate in the economy, working construction jobs and serving as personal care aides, according to the Center for Migration Studies.
“Trump often promises to ‘make the foreigners pay,’ but under these measures American households and firms would suffer the most,” the Peterson Institute for International Economics said in September, adding that the manufacturing and agricultural sectors would be “particularly hurt.”
Read more: Donald Trump’s mass deportations could ‘decimate’ America’s food supply
And, as at least one of Trump’s advisers has said, that likely means hardship for at least the first few years of his presidency. According to most analyses published by economists, his proposals would hasten Social Security’s insolvency, increase unemployment, raise inflation, lower GDP, massively add to the federal debt, and boost tax rates for the vast majority of Americans.
The PIIE found that Trump’s overall policies would lead to inflation of between 6% and 9.3% by 2026, grow consumer prices of as much as 28% by 2028, and raise unemployment. Its findings are generally in line with those from other institutions, such as Goldman Sachs and the University of Pennsylvania’s Penn Wharton Budget Model.
— Vinamrata Chaturvedi and Peter Green contributed to this article.