Market-Impacting Executive Orders Signed by Trump on Inauguration Day

Donald Trump’s Inauguration Day took place on 20 January 2025, marking the beginning of his second term in office. The President wasted no time making good on his campaign promises, signing a flurry of executive orders that have taken the country by storm. 

In this article, we’re taking a look at some of the executive orders that carry economic and geopolitical significance, and what they could mean for markets moving forward.

But first, what is an executive order and how much should traders pay attention? ^[1,2]

Executive orders are directives given by the President to subordinates in the executive branch, instructing them to perform certain tasks or preventing them from doing so. They are a vehicle by which Trump can exercise his legal authority as President, but do not grant or create new legal powers not already assigned to the presidency. 

While executive orders carry the weight of the law, they are not absolute and final. Once issued, executive orders can be overturned by a sitting President, overruled in court via a successful legal challenge, or blocked by Congress by passing laws to override them, or denying the required funding. 

What this means for traders is that executive orders should not be acted upon recklessly, as their impact on markets are not certain. However, executive orders can signal potential market changes, depending on how they are received by stakeholders. 

Executive orders signed by Trump that could impact the market

Up to US$ 500 billion in AI private sector infrastructure investment ^[3] 

While not an executive order, Trump’s announcement of billions of dollars in private sector investment for AI infrastructure development in the United States should still be given due consideration. This is because as president, Trump can pave the way through emergency declarations to increase electricity output, or fast track approval. 

In a White House briefing, Trump announced that OpenAI, Softbank and Oracle are planning a joint venture named Stargate. The aim is to develop 10 data centres, starting in Texas before spreading out to other parts of the US. Up to US$ 500 billion is expected to be committed over the next four years, with around 100,000 new jobs created. 

What this means for markets 

Certainly, Project Stargate could provide a lift to AI and tech stocks as investors buy up participating companies. The positive effects could flow downstream to commercial real estate, with data centre REITs picking up steam. As one of the stated aims of the joint venture is to improve healthcare using AI, this could also drive stocks of pharmaceutical and healthcare companies incorporating AI into their operations. 

Revoking Biden’s EV mandate

Under Biden’s administration, several initiatives were introduced to encourage electric vehicle adoption and help the country meet its emissions goals. This so-called “EV mandate” has been revoked by Trump via executive order. 

This means an easing in emission rules by private and commercial vehicles; a slowdown in federal funding for EV charging infrastructure; and a repeal of the non-binding target that 50% of new vehicles sold should be zero-emission by 2030. There could also be an ending of EV tax credits worth US$ 7,500 for consumers.  

What this means for markets ^[4] 

Unsurprisingly, shares of Tesla and other EV automakers fell after the announcement, but analysts expect long-term EV sales to continue growing, albeit at a slower pace. 

In expectation of this change, Ford and GM have already scaled back or eliminated new EV production. Tesla stands to be most affected by this executive order, but this could be offset by gains made by subsidiary SpaceX. 

In his inauguration speech, Trump pledged to land Americans on Mars, an announcement that prompted gains in space company stocks. 

On the flipside, traditional automakers could see a lift in sales as consumers are given more leeway to choose between EVs and ICE vehicles. 

Rolling back restrictions on oil and gas expansion in Alaska 

Trump’s determination to “drill, baby, drill” is predicated on the belief that unlocking America’s vast reserves of oil and gas is the key to national rejuvenation. To that end, he has issued an executive order to roll back the ban on oil and gas exploration in Alaska that was instituted by Biden.

What this means for markets ^[5]

It should be noted that this executive order is highly likely to face legal challenges. When Trump tried to undo an offshore drilling ban in the Arctic enacted during Obama’s administration, the Alaskan court ruled that an Act of Congress was needed to undo the ban. 

However, if this executive order survives litigation, this will likely spur a bonanza for oil and gas companies, as hundreds of millions of acres of the U.S. coastline could be unlocked for energy prospecting. 

Furthermore, Trump has also signed another executive order suspending offshore wind leasing from all areas of the outer continental shelf pending an environmental and economic review. This is in line with his critical stance on wind energy. 

With the double whammy of an oil boom and slowing policy for wind energy, energy investors may feel the urge to rotate back into fossil fuel stocks. 

Imposing of trade tariffs ^[6]

Trump has repeatedly mentioned his intentions to impose trade tariffs on key trading partners to maintain “fairness”. However, he has yet to sign any executive orders implementing such tariffs as yet. 

The US President has considered implementing a 10% trade tariff on China, 25% trade tariff on Canada and Mexico as well as duties on the EU. He has expressed a deadline of 1 February 2025 for these tariffs to take effect. 

What this means for markets 

Placing tariffs on imports means higher prices for American consumers, leading to higher inflation. This upwards pressure on interest rates could benefit US bond markets. 

However, US companies that rely heavily on imports from targeted countries could see profitability come under pressure, owing to higher costs. This could play out as underperformance in affected stocks. 

Conclusion

Love him or hate him, it is undeniable that President Trump makes for a mesmerising political figure. That he happens to be in charge of the world’s largest economy only adds to his allure.

However, is it important not to overreact to his declarations, as the risk of making a mistake trading on hype is very real indeed. Remember that over the long run, economic fundamentals have a greater pull over the markets than executive orders do. 

Trade US stocks, bonds, commodities, indices, ETFs and more through CFDs with Vantage. Enjoy tight spreads, low fees and award-winning customer support. Sign up for a live account now!

The information is provided for educational purposes only and doesn’t take into account your personal objectives, financial circumstances, or needs. It does not constitute investment advice. We encourage you to seek independent advice if necessary. The information has not been prepared in accordance with legal requirements designed to promote the independence of investment research. No representation or warranty is given as to the accuracy or completeness of any information contained within. This material may contain historical or past performance figures and should not be relied on. Furthermore estimates, forward-looking statements, and forecasts cannot be guaranteed. The information on this site and the products and services offered are not intended for distribution to any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

References