Trump's Second Term Sparks Market Jitters With Trade, Regulation, Expansion Plans

President Donald Trump is back in the Oval Office, and his Day 1 flurry of executive orders suggests a busy and eventful first 100 days ahead.

JPMorgan analysts Joyce Chang and Amy Ho warn that markets have yet to price in the full impact of Trump's aggressive trade stance, regulatory shake-ups, and expansionist ambitions.

Investors betting on a repeat of Trump's first term should buckle up—this time, the playbook looks bolder.

Tariff Tensions: A Trade War Ahead?

Trump quickly signaled a renewed focus on trade policy, emphasizing his commitment to overhauling the U.S. trade system in his inauguration speech.

Immediate tariffs didn't make the Day 1 cut, but they're looming. The threat of tariffs on Mexico and Canada—first floated last November—could become reality as early as Feb. 1.

JPMorgan warns that Trump's team could be eyeing a gradual escalation strategy, hiking tariffs by 2% to 5% per month. With Stephen Miran, Trump's pick for Council of Economic Advisors chair, advocating for a 20% optimal tariff rate, markets may be underestimating the inflationary shock ahead, the analysts say.

Read Also: Jamie Dimon Supports Trump’s Tariffs: ‘If It’s A Little Inflationary, But It’s Good For National Security, So Be It’

Red Tape Revisited: Deregulation Or Mere Reshuffle?

While businesses cheered Trump's push for regulatory efficiency, JPMorgan suggests it's more of a reshuffle than an outright deregulation spree.

Basel III reforms and non-bank regulations aren't likely to advance, but the analysts expect faster approvals for M&A deals. Trump's renewed exit from the Paris Agreement reflects his administration's focus on reducing climate-related capital constraints, according to the analysts.

But with a Republican-led Congress still facing hurdles on tax reform, any sweeping economic overhaul remains a tough sell.

America First-And Maybe A Bit Bigger?

Foreign policy under Trump 2.0 appears to focus on economic assertiveness and strategic territorial considerations.

JPMorgan highlights his focus on Mexico, Canada, Greenland, and the Panama Canal—suggesting strategic interests that may influence global markets.

While Trump has downplayed the idea of military action, his firm stance on China and Russia suggests economic and strategic priorities will take center stage.

The Verdict: Buckle Up For Policy Uncertainty

Markets prefer certainty, but Trump's second term introduces potential challenges and uncertainties.

JPMorgan's analysts note that Trump's signature “escalate-to-de-escalate” strategy could keep investors on edge.

While the stock market benefits from easy financial conditions, Trump’s return introduces the potential for increased volatility, with tariff increases and geopolitical shifts adding to investor uncertainty.

The iPath Series B S&P 500 VIX Short-Term Futures ETN VXX and the ProShares Trust VIX Short-Term Futures ETF VIXY are to funds that seek to profit from volatility.

Read Next:

• WTO Chief Says ‘Everyone Will Pay’ If ‘Tit-For-Tat’ Trade War Breaks Out Amid Trump’s Tariff Threat, Leading To Double-Digit Global GDP Losses

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