As the 2024 US presidential election approaches, analysts are actively discussing potential outcomes, especially how a second term for Donald Trump could unfold.
Commenting on this issue, the JP Morgan team believes that a second Trump administration will bring significant changes in various policy areas, from foreign relations to domestic regulations.
One of the key shifts under a Trump 2.0 administration will be a tougher stance on foreign policy, especially toward China. In its note, JPMorgan highlights that Trump's approach will be driven by the belief that “America must win and dominate,” which will likely lead to a more aggressive use of executive orders related to trade and investment.
At the same time, a second term could also lead to “a more contentious US-EU relationship with negative consequences for Ukraine,” the bank team emphasized.
The memo notes that environmental policies will also decline. Trump is expected to roll back many of the clean energy initiatives implemented by the Biden administration, focusing instead on easing the regulatory burden on oil and gas companies.
JPMorgan added: “However, we do not see any structural changes in our forecasts for both oil and US production during the next presidential term, regardless of who sits in the White House.”
Domestically, a Trump administration will likely include experienced and loyal politicians, in contrast to some of the unconventional selections during his first term. This may lead to a simpler and perhaps more market-friendly approach to governance.
Economic policies under Trump 2.0 would emphasize tax cuts and deregulation. The focus will be on lowering corporate taxes further, reducing regulatory burdens, and perhaps appointing a new Fed chair who supports a negative interest rate policy.
At the same time, the infrastructure sector could see continued investment, especially in 5G and traditional infrastructure projects. JPMorgan believes the Trump administration will show more support for industries such as aerospace, defense, airlines and financial services.
Trump remains focused on his Make America Great Again (MAGA) base, and uses social media extensively for campaigning and political messaging, analysts said. Abortion remains “an interesting issue, but both sides may have exaggerated how they addressed it on the campaign trail,” they wrote.
Meanwhile, Generation Z remains a significant voting bloc, but is also “disillusioned, raising questions about voter turnout, and requiring specific policy appeals.”
Overall, the 2024 election is expected to be very competitive, with close races in several key battleground states. Current polls show Trump leading in critical states such as Arizona, Georgia and Michigan, although the margins are narrow.
“The outcome of the 2024 US presidential election will come down to just thousands of votes in a few pivotal swing states, mirroring the close results of 2016 and 2020,” the JPMorgan note said.