The outcome of the US presidential elections impacts policies across key sectors of the economy, from energy to automotive, healthcare, and banking. The S&P 500 may experience fluctuations as leadership and policies shift, but specific industries stand to gain or lose the most.
Here, know about the key sectors to be affected by the US election:
The automotive industry is facing policy changes that could impact the growth of electric vehicles (EVs). Under the Trump administration, EPA emissions regulations and EV tax credits may be rolled back, potentially slowing EV adoption in favour of gas-powered vehicles. This change could benefit companies like Ford and General Motors, which derive significant revenue from gas-powered cars. However, Trump could also reintroduce tariffs on Mexican imports, impacting automakers with factories in Mexico, such as GM and Stellantis.
Alternatively, a Harris administration would likely continue to support EV incentives and emissions regulations to promote cleaner energy. Tesla, with limited exposure to Mexican production, may benefit from either scenario due to its focus on domestic manufacturing.
Energy remains a divisive issue between political parties. Trump has historically favoured domestic oil and gas production, boosting stocks in traditional fossil fuel companies. However, his approach to tariffs could lead to volatility, particularly if trade tensions with China affect US oil exports.
A Harris administration would likely continue supporting clean energy through the Inflation Reduction Act, which funds solar, wind, and EV infrastructure. This focus on renewable energy could benefit solar companies like First Solar and developers like NextEra Energy. However, clean energy investors remain cautious, aware of the need for federal support to sustain growth.
Election outcomes could bring changes for healthcare insurers and providers. Medicare Advantage plans have faced tighter payment policies and higher quality rating requirements, which could ease under a Trump administration, creating a more favourable environment for insurers like CVS Health and UnitedHealth.
Conversely, a Harris administration may strengthen the Affordable Care Act (ACA) marketplaces, benefiting insurers and hospitals that serve these patient populations. Insurers focused on ACA markets, like Oscar Health, and hospitals reliant on ACA patient subsidies, such as Tenet Healthcare and HCA Healthcare, could see increased support.
The industrial sector, particularly manufacturers, could see significant changes based on the election. Trump’s preference for tariffs to bring manufacturing back to the US could impact companies with global supply chains. Boeing, for example, may face challenges if trade tensions with China worsen, potentially benefiting European rival Airbus.
Employment in sectors like semiconductor, automotive, and battery production aligns with Trump’s push for domestic manufacturing. Demand in aerospace and AI manufacturing remains steady, but overall performance will depend on global trade relations and demand.
Small and community banks may face regulatory shifts following the election. Trump has favoured deregulation, which supports mergers and acquisitions in the financial sector, benefiting larger Wall Street banks.
A Harris administration might aim to protect consumers by leveling the playing field, which could favor smaller, regional banks that lend to small businesses. This regulatory approach may provide these banks an opportunity to compete with larger institutions.
Regulation in the tech sector, particularly concerning antitrust and competition, is increasingly under scrutiny. Harris has supported a balanced regulatory approach to address potential monopolistic practices by tech giants like Alphabet and Meta, aiming to encourage innovation while ensuring fair competition. Conversely, Trump’s less restrictive stance could ease regulatory pressure, appealing to big tech.
The semiconductor industry enjoys bipartisan support. Both Trump and Harris are likely to continue policies that restrict chip exports to China to strengthen US manufacturing in this critical area, which is vital for artificial intelligence and tech advancements.
The US election has the potential to significantly impact industries sensitive to policy changes, such as energy, healthcare, and technology. While some market reactions may be short-lived, specific sectors may experience longer-lasting effects depending on the election outcome. Investors and companies can use these insights to strategically align with policies that could enable growth or present challenges in their respective industries.