On Jan. 20, President Donald Trump commenced his second term by enacting a series of executive orders and repealing dozens of directives issued by former president Joe Biden, aimed at reshaping various sectors of the U.S. economy. These actions are poised to create winners and losers across different industries (read: ETFs to Watch as Trump Heads to White House Again).
Let’s delve into some of them in detail and take a look at the ETFs set to benefit or lose from the move:
Declaration of Energy Emergency
Trump declared a national energy emergency to accelerate oil, gas, and power projects that favor expanding fossil fuel production and generation. The move is intended to reduce environmental restrictions and promote energy infrastructure projects. It will also ease authorization for new transmission and pipeline infrastructure.
Trump also signed orders to promote oil and gas development in Alaska and reverse Biden’s efforts to protect vast Arctic lands and U.S. coastal waters from drilling.
Companies engaged in oil and gas exploration and production are likely to experience growth due to deregulation and increased domestic production. Energy Select Sector SPDR Fund XLE, which offers exposure to the broad energy space, could be an intriguing pick. The fund has a Zacks ETF Rank #2 (Buy) (read: 5 ETFs Outperforming on Energy's Big Turnaround).
On the other hand, companies specializing in wind, solar, and other renewable sources may face challenges as federal support shifts away and ETFs like iShares Global Clean Energy ETF ICLN could lose in this new regulatory environment. It offers exposure to global companies that produce energy from solar, wind, and other renewable sources and has a Zacks ETF Rank #3 (Hold).
Withdrawal From Paris Climate
Trump repeated his move made in his first term by pulling the United States out of the Paris Climate Agreement, an international agreement to fight climate change. Trump has called climate change a hoax and says the accord puts the United States at a competitive disadvantage to geopolitical rivals like China. Renewable energy ETFs are again set to lose from this move. Invesco WilderHill Clean Energy ETF PBW offers exposure to publicly traded companies in the United States that are engaged in the advancement of cleaner energy and conservation.
Revocation of Electric Vehicle Mandates
Trump revoked Biden's order that had set a 50% electric vehicles target for 2030. Manufacturers focusing on traditional internal combustion engine vehicles may benefit from relaxed regulations. First Trust S-Network Future Vehicles & Technology ETF CARZ, which offers exposure to major global automakers, could benefit from the move.
However, companies heavily invested in EV technology could face setbacks due to decreased government support and incentives for electric vehicles. As such, EV ETFs like Global X Autonomous & Electric Vehicles ETF DRIV are expected to lose under the second Trump administration. This fund seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles, and EV components and materials (read: Tough Times for EVs in 2025? ETFs in Focus).
President Trump also said he could impose 25% tariffs on Canada and Mexico from Feb. 1, which would hurt many international automakers.
Withdrawal From the World Health Organization (WHO)
President Donald Trump signed an executive order initiating the United States' withdrawal from the WHO, citing the agency’s mishandling of the COVID-19 pandemic and other global health crises.
The pharmaceutical industry might face challenges as the withdrawal could disrupt joint initiatives between U.S. health agencies and the WHO, affecting disease surveillance, data sharing, and coordinated responses to health emergencies. Pharma ETFs like iShares U.S. Pharmaceuticals ETF IHE could be affected by the move.
Cryptocurrency
Ahead of the inauguration ceremony, Donald Trump launched a meme coin called $TRUMP. The introduction of pro-cryptocurrency executive orders, including the launch of $TRUMP, signals a potential shift in the digital asset landscape. A supportive regulatory environment will continue to drive growth in digital assets. The expansion of Trump's crypto interests comes as no surprise as his administration is widely expected to usher in a "golden age" for cryptocurrencies, in stark contrast to the regulatory scrutiny the industry experienced under former president Joe Biden (read: ETFs in Focus as Bitcoin Tops $105K Ahead of Trump's Inauguration).
ETFs like Bitwise Crypto Industry Innovators ETF BITQ provide exposure to companies operating in the crypto space and is likely to gain.
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Global X Autonomous & Electric Vehicles ETF (DRIV): ETF Research Reports
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports
iShares Global Clean Energy ETF (ICLN): ETF Research Reports
First Trust S-Network Future Vehicles & Technology ETF (CARZ): ETF Research Reports
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
Bitwise Crypto Industry Innovators ETF (BITQ): ETF Research Reports
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