Trump's Spending Power Grab: A New Era for US Finance?

As President Donald Trump returns to the White House, his administration is exploring dozens of new ways to seize spending power, potentially reshaping the US financial landscape. This article delves into the implications of these moves, the sectors most likely to be affected, and the constitutional challenges that may arise.



A New Approach to Federal Spending

The Trump administration has signaled its intention to assert greater control over federal spending, with a memo from Matthew Vaeth, acting director of the White House Office of Management and Budget (OMB), ordering a pause in federal grants and loans. This move reflects a broader theory of presidential power that Trump endorsed during his 2024 campaign, challenging the traditional separation of powers between the executive and legislative branches.



Sectors and Industries in the Crosshairs

Several sectors and industries are likely to be affected by the White House's new spending initiatives, with potential impacts on their stock performances. Financials and energy stocks are expected to benefit from deregulation and increased government spending, while small-cap companies may face headwinds from higher tariffs and labor cost inflation. Construction and hospitality industries could face higher operational costs due to tighter immigration policies and rising tariffs, testing the resilience of labor-intensive businesses. Renewable energy and offshore wind stocks may be impacted by changes in transmission planning and permitting processes, and LNG and petrochemical stocks could experience increased competition and potential oversupply.

Constitutional Challenges and Power Dynamics

The White House's attempts to seize spending power could lead to significant constitutional challenges and an imbalance between the executive and legislative branches. The Trump administration's theory of "impoundment" holds that the president can decide not to spend money on anything they deem unnecessary, potentially setting up a constitutional fight that would require the Supreme Court to weigh in. The memo's language suggests a broad interpretation of presidential power that could lead to further constitutional challenges and pushback from other branches of government.



Looking Ahead

As the Trump administration explores new ways to seize spending power, investors and stakeholders should closely monitor the developments and their potential impacts on the financial landscape. While some sectors may benefit from deregulation and increased government spending, others could face significant challenges. The outcome of these developments will depend on the actions of the judiciary, Congress, and the public in holding the executive branch accountable and preserving the separation of powers.

In conclusion, the White House's attempts to seize spending power could have far-reaching implications for the US financial landscape, with potential impacts on various sectors and industries. As the administration presses forward with its agenda, investors and stakeholders should stay informed and adapt their strategies accordingly. The balance of power between the executive and legislative branches, as well as the potential constitutional challenges, will be crucial factors to watch in the coming months and years.