01/20/2025

Donald Trump's presidency officially begins on Monday, January 20, marking the beginning of a chapter that promises to be as disruptive as his first term in office. Unlike 2016, when his victory was a surprise, this time the Trump team arrives ready to start up from the outset, with a package of more than 100 executive orders ready to be signed immediately. These measures cover key areas such as trade, immigration, energy, and deregulation, and they promise to shake the global markets.

Trump's "Day One" approach is designed to dismantle many of the policies implemented by his predecessor, Joe Biden, and re-establish several measures of his first administration. However, the unpredictable nature of his decisions generates significant uncertainty, as it is not yet clear how many of these orders will be implemented immediately or in what way.

For example, in the commercial field, Trump has promised to impose a 25% tariff on all imported products from Canada and Mexico. This would be an aggressive sign that he intends to use tariffs as a trading tool to achieve a "great deal" that redesigns the international trade system. However, it is also speculated that these tariffs could be temporary and adjusted after reaching bilateral agreements.

As for fiscal policy, the nominee for Secretary of the Treasury, Scott Bessent, stressed the importance of extending the 2017 tax cuts as a central part of Trump's economic policy. However, his testimony to the Senate Finance Committee provided little details on how the growing fiscal deficit will be managed, which is already a critical concern. Although Bessent has promised to maintain key programs such as Social Security and Medicare, his lack of clarity about other spending areas leaves doubts about the sustainability of public finances in the planet's largest economy.

Deregulation will be one of the central themes of Trump's agenda from day one, with measures that seek to reduce the regulatory burden on key sectors of the economy. In energy, we expect a relaxation of environmental regulations, prioritizing oil and gas extraction, along with less support for renewable energies. In the financial sector, the restrictions of the Dodd-Frank Act could be further reduced, giving banks greater margin to operate, although with potential risks to stability. In the automotive industry, the elimination of fuel efficiency standards would benefit traditional manufacturers. These initiatives aim to encourage business investment and reduce costs, although they could generate disputes about their long-term sustainability and their environmental implications.

Immigration policy will be another key pillar of Trump's agenda, with a focus on restricting the entry of immigrants and implementing stricter measures at the borders. Among the first actions, the re-establishment of the immigration ban for citizens of certain countries is expected, which had been reversed by the Biden administration. In addition, initiatives are being planned to strengthen security at the southern border, which could include the reactivation of projects such as the construction of the border wall and an increase in the deportation of undocumented immigrants. These policies aim to reduce the supply of foreign labor, which could create tensions in key economic sectors such as agriculture, construction, and services, which are highly dependent on migrant workers. Although these measures could face legal and political resistance, they represent a return to the priorities of his first term, focused on restricting immigration as a strategy to protect domestic jobs.

As we can see, the impact of these policies on financial markets could be significant. The sectors most exposed to trade, such as manufacturing and technology, face significant risks if tariffs are implemented quickly. In addition, the labor market could be affected by the migration restrictions. Finally, some of these measures, especially those relating to the imposition of tariffs, would have an immediate inflationary effect.

In short, Donald Trump's "Day One" promises to mark a change of direction in U.S. and international politics. While financial markets try to digest the magnitude of these policies, the key will be how they are implemented and adjusted in the coming months. For investors, this environment presents both significant risks and strategic opportunities, in a context of high volatility and uncertainty.