We are not going to predict who will win—history, especially the 2016 election results, shows that outcomes can be very unpredictable. Currently, different polls suggest both candidates are neck and neck. The purpose of this article is to prepare for different election results and make timely portfolio adjustments.
Overall Effect on the U.S. Economy and Stock Market
According to estimates from crfb.org of fiscal impact of Hariss and Trump Campaign Plans, Trump may be seen as a more favorable candidate for the economy and the U.S. stock market in general.
Source: crfb.org
In our opinion the implementation of Harris's proposed tax hikes poses a significant risk. Harris aims to raise the corporate tax rate from the current 21% to 28% and increase the minimum alternative tax from 15% to 21% (a mechanism that prevents large U.S. corporations from lowering their effective tax rate through the use of tax benefits and deductions below a set threshold). There is also a proposal to raise the tax on stock buybacks from 1% to 4%. These measures could reduce EPS growth in 2026 from ~9% YoY to 0.5% YoY, which could negatively impact the market as a whole.
Source: FactSet, Freedom Broker analysis
It's important to mention that the election of Harris or Trump doesn't guarantee a tax hike or cut, but the election of either candidate increases the chances of tax changes. Among Harris's other tax proposals, we can also mention: a capital gains tax rate hike from 20% to 28% for Americans earning $1 million a year or more and a tax on billionaires or unrealized capital gains (one of Harris's most controversial initiatives assumes a minimum effective tax rate of 25% for individuals whose net worth exceeds $100 million).
At the same time, Trump is proposing a corporate rate cut from 21% to 15%. Both candidates are enticing voters with different tax benefits, including the Child Tax Credit (CTC). If there are no changes in tax rates, we believe this risk will periodically come to the forefront due to persistent structural debt issues in the U.S., which have been exacerbated in recent years.
Sectoral/Industrial view
Energy
Trump is seen as a neutral-positive candidate for the sector. Trump's "Drill, baby, drill" quote reflects his general stance—promoting oil production in the U.S. He also wants to “unleash Energy Production from all sources, including nuclear”. The flip side is that Trump's energy policy may heighten competition with OPEC+, potentially sparking a new price war in the market that could decrease oil prices. Part of Trump's energy agenda could include boosting the construction of new liquefied natural gas terminals (core beneficiaries could be Cheniere Energy (LNG, Financial) and Kinder Morgan (KMI, Financial)). Conversely, renewables and electric vehicles (EVs) may come under pressure if Trump returns to the Oval Office, -- EV could become less affordable if existing programs (up to $7,500 for new cars and $4,000 for used ones) are canceled.
Harris is viewed as neutrally negative for the sector due to less support for oil production in the U.S. and a focus on green energy, benefiting companies like FSLR, RUN, ENPH, RIVN, and others.
Financials/Banks
If Trump wins, banking industry regulation would likely become more relaxed, making him a favorable candidate for the financial sector. Relaxed regulations mean lower compliance costs, a less strict implementation of Basel III regulation version, and more lending activities. More friendly banking sector regulations could positively impact: C, WFC, TFC, BAC, USB, JPM, GS, MS.
If Harris wins, a stricter version of Basel III regulation could be implemented; according to Bloomberg, CET1 requirements could grow by 7-10%. Additionally, Harris is likely to strengthen consumer protection in the banking sector, leading to increased compliance costs (Harris has stated that as California Attorney General, she fought against major banks).
Industrials/ defense industry
Overall, Trump is a neutral candidate for the industrial sector (excluding defense). He maintains a focus on the U.S. military-industrial complex, emphasizing the goal of maintaining U.S. technological superiority in defense, which is likely to translate into sustained or increased defense spending over the next four years, positively affecting key companies in the industry (RTX, HWM, NOC, LHX, BA, TXT, GD, LMT).
The principles outlined in the platform as "Revive Our Industrial Base" and "Save the American Auto Industry" likely signal additional support for national industrial production but may also imply potential increased tariffs for U.S. industrial companies with manufacturing facilities in Mexico. A potential intensification of U.S.-China confrontation if Trump is elected could impact companies like Corning (GLW), Albemarle Corp (ALB), Apple Inc (AAPL), Keysight Technologies Inc (KEYS), Nike (NKE), and others that have high exposure to China.
Harris appears to be a neutrally-positive candidate for the sector due to less aggressive tariff rhetoric, and because defense spending is likely to remain similar under both candidates. At the same time the is no evidence, that Harris is going lower tariffs against China.
Healthcare
As Vice President, Harris worked on expanding provisions of the Affordable Care Act (ACA). Likely, as President, Harris probably would strive to lower insurance premiums (Centene and UnitedHealth may face significant revenue declines if extended subsidies, which expire at the end of 2025, are not renewed). The Congressional Budget Office projects that ACA enrollment could decrease by 4 million people in one year; if this occurs, it could harm insurers' revenues by $25 billion. Harris is also likely to push for lower prescription drug prices, which may put pressure on major drug developers (potentially affecting LLY, ABBV, MRK, and others).
Overall, Trump is also seen as a more favorable candidate for this sector, as there is no expectation of increased regulation under his administration.
Tech Sector
If Harris is elected, there is likely to be continued antitrust pressure on tech giants (Amazon.com, Alphabet, Apple, Meta, and Microsoft), leading to periodic lawsuits, stricter oversight of new M&A deals, and incentives for further liberalization of conditions for users. Overall, Harris can be considered a neutrally-negative candidate for certain companies in the industry. Trump is likely to exert a similar effect on Big Tech; potential Vice President J.D. Vance has declared support for Biden's Federal Trade Commission chair, Lina Khan, who has criticized M&A activity among major tech companies.
Real Estate Developers
Harris promises additional incentives for homebuyers, which may support demand for real estate. Coupled with declining interest rates, this makes the homebuilding segment a potential beneficiary of a Harris election.
