How to Position Your Portfolio for Trump 2.0

Archive edition · Market data and company circumstances reflect 29 March 2025, when this newsletter was sent.

How to Invest in the Trump Economy

Since the beginning of President Trump’s second term, investors find themselves navigating a whirlwind of policy changes, economic shifts, and political maneuvers.

With trade barriers tightening, deregulation on the rise, and inflation holding firm, the investment landscape is evolving rapidly.

Let’s break down three key areas poised to benefit under Trump 2.0 and the investment opportunities they present.

"America First" & the Manufacturing Boom

During Trump’s first presidency, the "America First" agenda took center stage, and the sequel is proving to be no different. A pivot from free trade to protectionism means tariffs and trade barriers are likely to stay, giving a boost to domestic manufacturing.

The Push for Domestic Production

There is a renewed drive to reinvigorate America’s manufacturing sector, mirroring the golden era of the 1950s and 1960s. Companies involved in the build-out of industrial infrastructure, autos, pharmaceuticals, and data centers are set to gain significantly. Some potential beneficiaries include:

Even international companies are taking note of this shift. Firms such as Taiwan Semiconductor Manufacturing Company (TSMC) and Siemens are setting up operations in the U.S. to secure market access.

• Caterpillar (CAT) — A leader in construction and heavy machinery, Caterpillar stands to benefit from increased domestic infrastructure spending.
• Carrier Global (CARR) — As demand for efficient heating and cooling solutions rises, Carrier is well-positioned to capitalize on the industrial expansion.

Potential Risks: Labor Shortages and Higher Costs

While manufacturing is getting a boost, challenges remain. Industries that depend on immigration, such as homebuilding, could face labor shortages, leading to rising wages and operational costs. Investors should weigh these factors when considering industrial sector investments.

Deregulation: A Catalyst for Innovation

Trump’s return to the White House signals a fresh wave of deregulation, which is expected to spur growth in artificial intelligence (AI), robotics, and select areas of healthcare.

AI and Robotics: A New Frontier

The AI revolution is already well underway, but under a Trump administration, reduced regulatory oversight could accelerate adoption across industries. Companies leading the charge include:

• Boston Dynamics — A pioneer in robotics, Boston Dynamics is developing cutting-edge automation solutions for military, commercial, and research applications.
• Alphabet (GOOGL) — Alphabet’s self-driving car unit, Waymo, is rapidly expanding its presence in major U.S. cities. The challenge now is scaling profitability while maintaining safety and public trust.

Healthcare Innovation Amid Policy Uncertainty

While Trump’s policies create headwinds for some healthcare companies, pockets of innovation remain untouched by regulatory concerns. Notably:

One wildcard in the healthcare sector is the potential rollback of subsidies tied to the Affordable Care Act (ACA). While this creates uncertainty, investors should keep an eye on medical technology and biotech firms that stand to benefit from deregulation.

• Intuitive Surgical (ISRG) and Stryker (SYK) — Both companies are leaders in robotic-assisted surgery, a rapidly growing segment within medical technology.
• Cell Therapy Companies — Stem cell research, once stifled by bureaucratic red tape, could experience new momentum under the administration’s looser regulations.

Defense Spending and NATO Contributions

Defense stocks could also see a lift as Trump pressures NATO members to boost spending. While the U.S. defense budget is unlikely to change significantly, funds could be redirected toward cybersecurity, space defense, and military robotics. Investors looking for exposure should consider companies specializing in these next-generation defense technologies.

Bonds: Safe Haven Amid Inflation Uncertainty

Inflation remains a key concern under Trump 2.0. With tariffs and shifting trade policies in play, interest rate cuts from the Federal Reserve seem less likely in the near term. As a result, bonds have emerged as an attractive investment option for those seeking stability and income.

The Case for High-Quality Bonds

According to Capital Group, high-grade bonds offer compelling value in the current environment. Treasury yields are strong, and credit valuations remain tight, making quality bonds an appealing option over riskier alternatives.

Why Bonds Now?

In particular, Treasury Inflation-Protected Securities (TIPS) and municipal bonds could provide steady returns while mitigating risks associated with unpredictable market conditions.

• Diversification — Bonds provide a hedge against equity market volatility.
• Attractive Yields — Short and intermediate-term Treasuries offer solid returns with minimal risk.
• Inflation Protection — If inflation proves stickier than expected, bonds can serve as a buffer for portfolios.

Archive note

This article preserves the analysis in our weekly newsletter sent 29 March 2025. Market prices, forecasts and company circumstances reflect the time of publication and may have changed.

This material is general information, not personal financial advice or a recommendation to trade. Investing and trading involve risk, including loss of capital.