Trump's Political Momentum and Its Impact on Pro-Growth Policy Stocks

Donald Trump's political momentum, now giving him a nearly 70% chance of winning the 2024 election according to CNN's poll of pollsCNN's Poll of Polls Provides a Shocking Update on Trump’s …^[1], has reignited investor interest in sectors poised to benefit from his signature pro-growth policies. With a platform emphasizing deregulation, tax cuts, and robust defense spending, Trump's potential return to the White House could catalyze significant tailwinds for energy, defense, and small business stocks. These policies, however, must be evaluated through the lens of evolving geopolitical tensions and regulatory shifts that are reshaping global markets in 2025.

Energy Sector: Deregulation and Geopolitical Tailwinds

Trump's advocacy for energy deregulation and expanded fossil fuel production has historically buoyed energy stocks. His administration's rollback of environmental restrictions and support for domestic oil and gas infrastructure directly benefited companies in the sectorThe Future of Jobs Report 2025 | World Economic Forum^[3]. In 2025, similar policies could accelerate as geopolitical tensions—such as China's redirection of exports and the U.S.'s aggressive tariff regime—drive demand for energy self-sufficiencyIn charts: 7 global shifts defining 2025 so far^[2].

The World Economic Forum notes that geoeconomic fragmentation is already prompting industries to prioritize domestic energy productionThe Future of Jobs Report 2025 | World Economic Forum^[3]. For instance, the U.S. has imposed tariffs that have disrupted global supply chains, incentivizing energy companies to scale production to meet domestic demand. This dynamic could amplify profits for firms in oil, natural gas, and even renewable energy, as governments worldwide prioritize energy security amid rising instability.

Defense Sector: Modernization and Geopolitical Uncertainty

Trump's emphasis on military modernization and increased defense spending remains a cornerstone of his policy agendaThe Future of Jobs Report 2025 | World Economic Forum^[3]. His 2025 proposals, which include expanding the defense budget and accelerating procurement of advanced technologies, align with a global landscape marked by heightened geopolitical risks. The South China Sea disputes, Russia's ongoing conflicts, and the Yarlung Zangbo dam project in South Asia underscore a world where security expenditures are no longer optionalThe Future of Jobs Report 2025 | World Economic Forum^[3].

According to the Future of Jobs Report 2025, one-third of organizations are reconfiguring business models to address geoeconomic fragmentation, with cybersecurity and defense-related roles becoming criticalThe Future of Jobs Report 2025 | World Economic Forum^[3]. This trend bodes well for defense contractors, which could see sustained demand for next-generation systems, satellite technology, and cyber defense solutions. The sector's resilience is further bolstered by Trump's tendency to prioritize U.S. manufacturing, which could lead to long-term contracts for domestic firms.

Small Business: Tax Cuts and Regulatory Relief

Small businesses have long been a focal point of Trump's economic rhetoric, with his 2025 proposals emphasizing tax cuts and deregulation to spur local entrepreneurshipThe Future of Jobs Report 2025 | World Economic Forum^[3]. A Pennsylvania grocery store owner recently highlighted declining profits under the previous administration, illustrating the challenges small enterprises face in a high-regulation environmentHere's What Trump Found Out While Visiting a Local PA^[4]. Trump's plan to reduce bureaucratic hurdles—exemplified by his recent purge of 17 Inspectors General—signals a commitment to streamlining federal oversightTrump Cleans House, Fires 17 Inspectors General Overnight^[5].

However, small business stocks may face headwinds from global trade volatility. The U.S.'s 2025 tariff regime has forced companies to adapt to shifting supply chains, with some benefiting from reduced import competition while others struggle with higher input costsIn charts: 7 global shifts defining 2025 so far^[2]. Investors should focus on firms with agile supply chains or those leveraging Trump's tax incentives to reinvest in domestic operations.

Geopolitical and Regulatory Risks

While Trump's policies offer clear opportunities, investors must remain cautious about geopolitical risks. The WEF identifies trade policy as the highest area of global uncertainty for chief economistsIn charts: 7 global shifts defining 2025 so far^[2], with U.S. tariffs exacerbating economic nationalism. Energy and defense sectors, in particular, could experience volatility as nations recalibrate trade relationships. For example, China's pivot toward Europe and North America may reduce demand for U.S. exports, indirectly affecting energy and manufacturing firms.

Conclusion

Trump's political momentum positions energy, defense, and small business sectors as key beneficiaries of his pro-growth agenda. However, the interplay of deregulation, geopolitical tensions, and trade policy volatility demands a nuanced investment approach. Energy firms stand to gain from domestic production incentives, defense contractors from modernization demands, and small businesses from tax relief—though all must navigate a fragmented global economy. As the 2024 election approaches, investors should closely monitor how these policies align with broader geoeconomic shifts.