With the "debut" of the Donald Trump 2.0 cabinet! A comparison of the economic thoughts during the Donald Trump 1.0 and Donald Trump 2.0 eras reveals a commonality in supporting large-scale domestic tax cuts as an economic policy.

Looking back to 2017, Trump signed the largest tax cut bill in nearly 30 years in the USA, which significantly reduced the burden of personal income tax and corporate tax, particularly lowering the corporate tax rate from 35% to 21%.

The main economic proposals of the Donald Trump 2.0 cabinet include domestic tax relief, widespread tariff increases, and cuts to fiscal spending.

Related reading:The Trump Cabinet 2.0 "Dream Team" is unveiled! Understand the economic views of the officials in one image.

Market analysis predicts that Trump's stance on tax policy during this term may be more aggressive.

During his campaign, Trump announced that if elected, he would permanently lower the federal standard tax rate on U.S. corporate income from 35% to 21%, and even suggested reducing it further to 15%, but this preferential rate would only apply to companies manufacturing domestically in the USA. The goal is to encourage the return of manufacturing through tax policy.

With Trump winning the election and successfully securing both houses of Congress, the likelihood of significant tax cuts has increased significantly.

In addition, the U.S. Secretary of the Treasury, nominated by donald trump, Bencet, indicated in his first interview that his policy priorities would be to fulfill donald trump's various tax cut promises, including making the tax cuts from his first term permanent and eliminating taxes on tips, Social Security benefits, and overtime pay.

Bencet believes that the extension of the tax cuts by donald trump and the deregulation of certain sectors of the usa economy will lead to an "economic carnival."

How will the tax cut policy affect various industries?

Based on the logic of the above tax cuts, jpmorgan recently pointed out in a report:

The tax cut proposals from donald trump mainly target domestic producers, so the proportion of income coming from the usa is a key determinant for identifying beneficiary companies; for some companies with already low effective tax rates, the impact of the tax cuts will be relatively limited.

jpmorgan further pointed out that companies within the s&p 500 with an effective tax rate greater than 15% and with 80% of their income coming from the usa are potential beneficiaries of donald trump's tax cut policies, primarily concentrated in the financial and industrial sectors, followed by consumer staples, consumer discretionary, and medical care sectors.

By industry:

• Financial industry

On November 6th, following the announcement of victory by Donald Trump as the President of the USA, the U.S. stock market reacted swiftly, with the financial sector experiencing significant gains at the opening.$KBW Nasdaq Bank Index (.BKX.US)$It rose more than 10%, reaching its highest level since early 2022.

Investors generally expect that the tax cuts and tariff policies of the Trump administration will lead to a sustained high-interest rate environment set by the Federal Reserve, and this expectation has driven U.S. Treasury yields to soar, as higher Treasury yields imply that banks can earn more net interest income, thus enhancing market confidence in the profitability of banks.

Additionally, investors expect that the Trump administration will relax regulations on the financial industry. Specifically, the Trump administration may further weaken the rules regarding the amount of capital reserves that banks must hold, in order to reduce the operational costs of financial institutions.

Private equity groups are also expected to benefit from the Trump administration's more relaxed merger and acquisition regulatory policies. Data shows that on the first trading day after Trump's election announcement, stocks related to private equity also showed an upward trend. Market analysis indicates that more relaxed merger and acquisition regulations will lower compliance costs for private equity groups in acquisition deals, thus improving their return on investment.

JPMorgan believes that in the financial industry,$Blackstone (BX.US)$、$Progressive (PGR.US)$、 $Fiserv (FI.US)$、$PNC Financial Services (PNC.US)$、$U.S. Bancorp (USB.US)$Is expected to lead.

• Industrial sector.

Previously, Donald Trump proposed the concept of 'New American Industrialism' during his campaign, indicating a desire to reduce taxes for companies manufacturing in the USA and impose tariffs on those not manufacturing in the USA.

Trump's move aims to strongly support domestic manufacturers. According to reports, his 'New American Industrialism' plan may include: reducing taxes on domestic manufacturers from 21% to 15%, imposing tariffs of 10%-20% on imported products, reducing regulations on domestic manufacturers, and providing land to potential investors.

JPMorgan believes that in the industrial sector,$Leidos (LDOS.US)$、$Paycom Software (PAYC.US)$、$Rollins (ROL.US)$、$Verisk Analytics (VRSK.US)$、$Old Dominion Freight Line (ODFL.US)$Will perform the best.

• Must be consumer.

The tax reduction policy has a positive effect on the usa economy. Reducing corporate and personal income taxes can effectively enhance corporate profits and residents' disposable income, thereby stimulating domestic investment activities and consumer demand.

Looking back at the tax reform measures implemented during the donald trump administration, corporate profits significantly increased just six months after they took effect, leading to an expansion in consumer demand.

jpmorgan believes that in the essential consumer sector,$Conagra Brands (CAG.US)$、$Clorox (CLX.US)$、$Altria (MO.US)$、$Walmart (WMT.US)$、$The Campbell's Co (CPB.US)$Will benefit first.

• Consumer

The logic of benefiting in the consumer industry is the same as above.

JPMorgan believes that in the non-essential consumer industry,$CarMax (KMX.US)$、$PulteGroup (PHM.US)$、$Ross Stores (ROST.US)$、$Lowe's Companies (LOW.US)$、$Home Depot (HD.US)$Will benefit the most.

• The medical care sector usually outperforms the overall market during economic downturns due to its low correlation with economic cycles. For example, in the global economic recession of 2009, the pharmaceutical and biotechnology industries had steady performance and limited impact on sales and profits.

During Trump's previous term, he encouraged U.S. companies to repatriate a large amount of capital that had been stranded overseas and significantly reduced the corporate merger tax and the repatriation tax rate for foreign funds.

For a long time, large American pharmaceutical companies have preferred to use overseas funds to acquire foreign companies rather than repatriate them to the domestic market facing a tax rate as high as 35%. Trump proposed significantly lowering this repatriation tax rate to 10% to encourage companies to use part of their funds to expand hiring and increase investment.

JPMorgan believes that in the medical care industry,$Labcorp Holdings (LH.US)$、$Cardinal Health (CAH.US)$、$Incyte (INCY.US)$、$Molina Healthcare (MOH.US)$、$Centene (CNC.US)$Will perform the best.

In addition, with a series of campaign policies from Donald Trump being implemented, relevant concept stocks are expected to continue benefiting. How to seize investment opportunities? Open Futubull > U.S. Stocks > Investment Themes to see it all at a glance.Donald Trump concept stocks！

Editor/ping