While pundits debate policy differences, few examine the potential market consequences of the upcoming presidential election. This analysis bridges the gap between political discourse and investment strategy by exploring how Trump's and Harris's campaign promises could impact various sectors of the stock market.
We've identified potential winners and losers across industries, assuming (optimistically) that each candidate would have full legislative support and follow through on their promises. This unique perspective on how political outcomes might shape investment opportunities allows readers to consider potential trades based on election results.
Our findings, summarized in the table below, reveal some surprising consistencies. Regardless of who wins, Manufacturing, Materials, and Construction stocks are likely to benefit. Conversely, large Tech firms may face challenges under either administration.
Winners Under Both Candidates
Manufacturing
Domestic US manufacturing firms are likely to get a boost from either candidate. Trump will give them tariffs to make overseas firms less competitive, while Harris is likely to offer subsidies, tax breaks, and some tariffs. That said, while these campaign promises resonate with voters, neither is likely to make much impact in a mere four years. US Manufacturing jobs as a percentage of US employment have been in secular decline since the late 1950s. Detroit was hollowed out in the 1970s, long before China was exporting anything.
Materials & Construction
The focus of the two candidates is slightly different. Trump wants to spend on infrastructure, while Harris is more focused on housing supply and affordability. In both cases, material and construction firms come out ahead. With Trump, heavy construction would also benefit (think Caterpillar), while with Harris, home builders like Lennar are likely beneficiaries.
Losers Under Both Candidates
Big Tech
There is some common ground here. Both candidates are likely to apply antitrust measures to the large-cap firms they dislike. It's already happening to Google. But beyond that, the two candidates diverge. Harris is more likely to bring regulations to the "magnificent seven," especially AI regulation. Trump is anti-regulation but has an animus for social media firms like Meta, which tend to lean left, and has even indirectly threatened to lock up Mark Zuckerberg once he is in office.
Trump Winners
Energy
Despite recently becoming friends with Elon Musk, Trump has made it clear that he is a fan of fossil fuels and will move regulatory obstacles, especially environmental ones, out of the way to permit greater exploration within the US and boost domestic production.
Financial Sector
As a lifelong New Yorker, Trump is fully aware of the policy preferences of the financial firms that reside next to him in Manhattan: lower corporate tax rates, looser financial oversight, and more tolerance of mergers and acquisitions.
Crypto
The former President has declared that he will make the US the "crypto capital of the planet" and that there will be a Bitcoin stockpile. The details beyond this are vague, but he appears to be positioning himself in opposition to the current SEC chairman and aligning himself with younger voters. His sons also stand to benefit as they have just launched a crypto platform. At the very least, this would help the slew of new Crypto ETFs as well as exchanges like Coinbase.
Trump Media
Despite the conflict of interest, it's likely Trump's publicly traded firm stands to benefit. The President would have an unedited communication platform he owns, which could increase the user base. The fact that he is President might also increase investor confidence and lead to government contracts.
Trump Losers
EV & Clean Energy
Trump has pledged to reverse many of Biden's climate policies, including tax incentives for electric vehicles and stringent emissions standards for automobiles and power plants. A Trump administration would likely weaken vehicle and appliance efficiency standards. The losing firms are likely to be names like Tesla, Rivian, and firms involved with Lithium or its supply chain.
International Exporters
Based on Trump's proposed tariff policies, several publicly traded overseas exporter firms could be negatively affected as they see reduced US demand. These include Chinese firms like Alibaba, JD.com, and BYD, while pretty much any major car maker or electronics manufacturer would also be hurt, including VW, Toyota, Sony, and Samsung.
Harris Winners
Semiconductors
Harris supports investing in "critical industries of the future," including the semiconductor industry. She would likely continue the Biden administration's support for the semiconductor industry through the CHIPS Act, providing billions in incentives for domestic manufacturing, research, and development, potentially benefiting firms like Broadcom and Qualcomm.
EV & Clean Energy
No surprise here as Harris has historically been a supporter of a Green agenda. Whether she would simply continue to expand upon Biden's policies remains to be seen. She supported the Inflation Reduction Act, which provides significant incentives for clean energy and EVs, and has advocated for increased investment in renewable energy, domestic EV production, and charging infrastructure. In this scenario, ETFs like TAN and ICLN would likely do well.
Some Healthcare Stocks
Harris's healthcare policies could benefit healthcare stocks by strengthening the Affordable Care Act, expanding Medicare, and giving more access to care. Her support for women's health initiatives, telemedicine, and biotech research could boost related companies. While she aims to lower drug prices, her commitment to protecting private insurance and expanding coverage could benefit insurers and managed care organizations overall.
Harris Losers
Big Pharma
Under Harris, pharmaceutical firms could face increased pressure on drug pricing. Her support for expanding Medicare drug price negotiations, extending out-of-pocket cost caps to all Americans, and cracking down on pharmacy benefit managers could reduce industry profits. Harris has a history of aggressively regulating pharma as California's attorney general.
Energy
Harris is more likely to hurt energy companies through stricter regulations, potential fracking restrictions, and ending federal support for oil and gas. She may halt new oil leases on federal lands, regulate methane emissions, and shift focus to clean energy. Her history of environmental litigation suggests tougher enforcement. These policies could increase costs, limit expansion, and reduce profitability for traditional energy firms.
Gun Manufacturers
Despite being a proclaimed gun owner, Harris is hardly close to the Second Amendment crowd. She is likely to hurt gun companies by advocating for stricter regulations, including reinstating the assault weapons ban, expanding background checks, reducing firearm manufacturer civil liability protections, and regulating ghost guns and conversion devices. Her support for red flag laws, domestic violence protections, and cracking down on illegal gun trafficking could reduce sales. As head of the White House Office of Gun Violence Prevention, she's positioned to implement policies that could impact gun manufacturers' profits.
Gig Economy Firms
Harris could harm gig economy firms by supporting stricter worker classification laws, similar to California's AB5. This would force companies to reclassify independent contractors as employees, increasing costs for benefits and labor protections. Her backing of pro-union policies and potential support for the PRO Act could further impact gig companies' business models, potentially leading to reduced flexibility for workers and higher operational expenses for firms like Uber and Lyft.
Conclusion
The policy proposals of both Trump and Harris could significantly impact various asset prices. While some industries, like manufacturing and construction, may benefit regardless of the election outcome, others face starkly different futures depending on who takes office.
However, it's crucial to remember that campaign promises don't always become policy, and the complexities of governance often lead to unexpected outcomes. Market reactions are unpredictable and influenced by numerous factors beyond political policies.
Investors should use this analysis as a starting point for further research, not as definitive investment advice. A diversified approach and staying informed about both political developments and broader market trends remain wise strategies.
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