President-Elect Donald Trump, following his victory in the November 2024 U.S. presidential election, is set to assume office on January 20, 2025. His proposed policies, including increased tariffs on imports from Canada and Mexico, higher tariffs on imported aluminum and steel, and a favorable stance toward cryptocurrencies, are expected to significantly influence financial markets. This report analyzes the potential impacts on equities, commodities (aluminum and steel), and cryptocurrencies, providing insights into expected price movements and associated risks prior to Trump’s inauguration.
Donald Trump’s return to the White House is anticipated to usher in a period of policy-driven market volatility. His campaign emphasized protectionist trade policies and a pro-cryptocurrency agenda, which could reshape global trade dynamics and domestic asset valuations. Key proposals include:
This report assesses the pre-inauguration market sentiment and forecasts potential price movements across relevant asset classes upon Trump’s return to office.
Policy Overview: Trump has proposed a 25% tariff on most goods imported from Canada and Mexico, citing concerns over illegal immigration and fentanyl smuggling. These tariffs would disrupt the United States-Mexico-Canada Agreement (USMCA), which facilitates $1.3 trillion in annual trade among the three nations.
Market Implications:
Equities: The tariffs could negatively impact U.S. companies reliant on North American supply chains, particularly in the automotive, manufacturing, and consumer goods sectors. For example, automakers like Ford and General Motors, which depend on cross-border parts, may face higher costs, potentially reducing profit margins and stock prices. Canadian and Mexican equities, such as those listed on the S&P/TSX Composite Index, may also decline due to retaliatory tariffs and reduced U.S. demand.
Commodities: Energy prices could rise if Canada, a major U.S. oil supplier, imposes retaliatory measures on energy exports. Agricultural commodities, such as corn and soybeans, may face volatility if Mexico retaliates against U.S. exports.
Currencies: The Canadian dollar (CAD) and Mexican peso (MXN) are likely to weaken against the U.S. dollar (USD) due to trade uncertainties, boosting the USD’s relative strength.
Pre-Inauguration Sentiment: Markets are pricing in an 8-9% effective tariff rate on global trade, with the USD softening slightly as investors await clarity on implementation timelines.
Policy Overview: Trump plans to impose or increase tariffs on imported aluminum and steel, building on his first-term policies that set 10% tariffs on aluminum and 25% on steel. The new tariffs aim to protect U.S. producers by reducing reliance on foreign metals, particularly from Canada (the largest supplier) and China.
Market Implications:
Pre-Inauguration Sentiment: Investors are cautiously optimistic about U.S. metal producers, with stock prices of companies like Nucor showing modest gains in late 2024. However, concerns about global trade wars are tempering broader market enthusiasm.
Policy Overview: Trump has positioned himself as a cryptocurrency advocate, promising to foster innovation and reduce regulatory burdens on digital assets. His administration may prioritize policies that integrate cryptocurrencies into the financial system, potentially including tax incentives or clearer regulatory frameworks.
Market Implications:
Pre-Inauguration Sentiment: The crypto market is experiencing a pre-inauguration rally, with Bitcoin up 10% since the November 2024 election. However, some traders on X express bearish concerns due to potential macroeconomic risks from tariffs.
Projected Range (Q1 2025):
Projected Range (Q1 2025):
Projected Range (Q1 2025):
President-Elect Donald Trump’s inauguration on January 20, 2025, is poised to introduce significant market disruptions driven by his protectionist trade policies and pro-cryptocurrency stance. While tariffs on Canada, Mexico, aluminum, and steel are expected to boost domestic producers and certain commodities, they pose risks to equities and global trade stability. The cryptocurrency market is likely to benefit from Trump’s advocacy, but volatility remains a concern. Investors should adopt a cautious, diversified approach, focusing on sectors and assets likely to benefit from policy shifts while hedging against broader economic risks.
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