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money talks
What does the US election mean for your finances? Which industries can stand out? Here you will find ideas and tips on how to optimize your financial situation to benefit from the new political framework.
The time has finally come: America has voted. As of this writing on Wednesday, the winner is not 100% certain, but all predictions point to a Trump victory and a Republican majority in the Senate and House of Representatives. How might the election results affect your finances? Who benefits and who loses? Here are some thoughts and ideas on how to best position yourself and your portfolio for the future.
What awaits us in economic policy?
Kamala Harris is pushing for tax reform, green energy and affordable housing investments Donald Trump a policy Protectionism, tax cuts and deregulation. This could have significant impacts on inflation, trade, taxation and key sectors such as energy, finance and infrastructure. Especially since Republicans still hold a majority in the Senate.
Specifically, U.S. economic policy under Trump could take the following steps:
- Trade and higher tariffs: Trump plans to impose steep tariffs on imported products, especially those from China. These protectionist measures are intended to encourage domestic production but could lead to retaliation and drive up prices for consumers.
- Tax reduction: Trump wants to extend and possibly expand the 2017 tax cuts, which would benefit households and businesses in the short term but could add about $5.8 trillion to the national debt.
- Deregulation: Trump's policies rely heavily on reducing regulations, especially in the financial and energy sectors. In the short term, these measures can increase the profits of these industries, but in the long term they pose risks to the environment and health.
- Entry restrictions: Tighter immigration policies could reduce labor supply and increase wages, creating inflationary pressures.
This is in stark contrast to the Democratic Party’s road mapwhich is mainly based on Promote greater economic equality and environmental protection. Planned tax reform would increase corporate tax rate to 28% Raise capital gains taxes on high earnersFund important social projects. and initiatives affordable housingIncludes $25,000 down payment assistance for first-time homebuyers and tax incentives to build 3 million new homes, aiming to address the housing shortage. Furthermore, a large number of myInvestments in renewable energy and electric vehicles create green jobs globally. Low-income earners and families should benefit from expanded tax credits, which can reduce income inequality and increase consumption.
Which industries are likely to benefit or suffer under Trump?
The likely winners and losers under Trump
finance: Less regulation could benefit banks like JPMorgan Chase.
defense: Increasing the defense budget could benefit companies like Raytheon.
Cryptocurrency: Friendly regulations could encourage growth in the cryptocurrency space, especially since Trump has positioned himself as a supporter of cryptocurrencies.
industry: Trump's focus on domestic manufacturing could benefit companies like Caterpillar and Cummins.
Automotive Industry and Suppliers: Higher tariffs could disrupt global supply chains and increase the cost of parts and materials, driving down vehicle prices and demand.
agriculture: Even during Trump's first term, the agricultural sector suffered retaliatory tariffs from countries such as China. If these policies are reinstated, U.S. farmers may once again face limited export opportunities and declining incomes. ·
transportation: Higher import costs may reduce demand for transport services as businesses reduce activity due to higher prices. ·
Construction industry: The construction industry could face labor shortages if strict immigration restrictions are implemented. This will result in increased labor costs and project delays. ·
Consumer Goods and Retail: Retailers that rely on imported products will face higher costs as higher tariffs are passed on to consumers. This is likely to reduce spending in price-sensitive segments. ·
Technology sector: The technology sector may be affected by tightening trade policies with China. Supply chains may be disrupted and production costs may increase.
Renewable energy: A second Trump term could weaken or eliminate the Inflation Reduction Act, which would reduce investment in green technologies such as wind, solar and electric vehicles.
Possible challenges for the new government
Ahead of the election, analysts expected a divided government, with the opposition controlling at least one chamber of Congress. Things will be different now, with a Republican majority in both the Senate and House of Representatives. The following challenges may arise during Trump's presidency:
- Treasury bonds: Trump's tax plan could increase the national debt and cause long-term interest rates to rise.
- Labor market issues: Strict immigration restrictions could lead to labor shortages and inflationary pressures.
- Trading Volatility: Protectionist policies can lead to trade conflicts, such as B. leading with China and creating uncertainty.
- Geopolitical Tensions: Potential conflicts with China, Iran and Europe could affect global stability and impact markets.
5 financial tips
Historically, stocks have recovered in approximately three to twelve months under both Democratic and Republican administrations. Over the long term, economic fundamentals such as growth, inflation and interest rates play a greater role than political changes alone.
Here are some tips on how to prepare financially for the future:
1. Investment diversification
Diversify your investments Different industries, asset classes and countries. If you wish, you can add to your portfolio some of the industries that have particularly benefited under Trump.
2. Stay flexible
There could be unexpected volatility under Trump. Fast-trading investments such as ETFs have an advantage in this regard because you can quickly switch assets when necessary.
3. Stay informed and active
Long-term trends such as inflation, growth data and interest rates have a greater impact on markets than election results. Use changes to make strategic adjustments.
4. Focus on long-term trends
Long-term themes such as digitalization, demographic changes, robotics, cybersecurity and the energy transition remain relevant topics with potential.
5. Take advantage of short-term opportunities
When market volatility increases, there are more short-term opportunities – perfect for integrating these opportunities into your portfolio as supplements (satellites).
With a diversified and flexible portfolio, no matter who ultimately wins the election, you'll be well-prepared for the opportunities and challenges in the years ahead!
Where do you see opportunities now and how do you take advantage of them? What sectors or stocks do you place in your portfolio? 💸
Olga Miller…
… worked at UBS for more than a decade in a variety of roles, including setting up the Women's Advancement Initiative and the UBS Gender ETF. She subsequently founded independent financial imaging SmartPurse, which offers financial digital courses and workshops on the platform. Miler has blogged at MoneyTalks for five years and her first book, Rich, Richer…Me!, a humorous financial guide, was recently published by Observer Verlag.
Image: Evelyn Harlacher
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