Who stands to benefit from the election of Donald Trump?

The former tenant of the White House wants to continue the economic program of his first term: American protectionism ("America First") with new tariffs on imported goods, lower corporate taxes and reduced government intervention.

Economists believe that Donald Trump's program could be inflationary in the medium to long term. In 2018 and 2019, the Trump administration imposed nearly $80 billion in new taxes on Americans, marking one of the largest tax increases in decades, according to the Tax Foundation.

An inflationary economy could benefit various sectors, including precious metals like gold. The yellow metal offers investors protection against rising prices, volatility and geopolitical uncertainty. ETFs on these themes include the Abrdn Physical Precious Metals Basket Shares ETF. For direct exposure to gold, the iShares Physical Gold ETC replicates the precious metal's movements.

American protectionism is accompanied by a desire to restore the country's production capacity. Small and medium-sized companies stand to benefit from these measures. Indeed, investors regained their appetite for small and mid caps when Joe Biden announced his withdrawal from the race for a second term. For those wishing to gain exposure to this theme, there is the Invesco S&P SmallCap Momentum ETF, which replicates the performance of US small caps with strong exposure to undervalued stocks, or the Vanguard Mid-Cap Growth ETF, which invests mainly in industrial (17.1%), technology (13.8%), financial (13.7%) and healthcare (11%) companies.

Finally, American protectionism could be accompanied by a larger national defense budget. That's why the iShares U.S. Aerospace & Defense ETF could be interesting.

Who will benefit from a Kamala Harris election?

The current vice-president's agenda is unlikely to differ too much from that of Joe Biden. The Democrat wants to support the middle class through access to housing (new construction, various aids, reduced rental costs, tax incentives for builders, a proposed fund to support local innovation in housing supply solutions). In this context, homebuilders should do well. Two ETFs are on the theme, the iShares US Home Construction ETF (ISIN: US4642887529) and the SPDR S&P Homebuilders ETF (ISIN: US78464A8889). 

Kamala Harris' other campaign priority concerns small and medium-sized businesses, to whom she wants to grant tax breaks. However, she also wants to increase the tax rate for corporations and wealthy individuals.

Kamala Harris is in line with Donald Trump on spending to protect the country. The defense ETFs mentioned above could also make sense if Kamala Harris is elected.

This article was inspired by a paper by Kyle Anthony of Cboe Canada on the subject.