The Trump Trade: Navigating Tax and Tech Shifts in 2025

The Trump administration’s 2025 moves to terminate the IRS Direct File program and block Chinese AI startup DeepSeek represent a seismic shift in U.S. policy, reshaping markets for tax prep companies and tech giants alike. These decisions, driven by political, economic, and national security imperatives, offer both opportunities and risks for investors. Let’s dissect the implications.

The IRS Direct File Termination: A Windfall for Tax Prep Giants

The IRS Direct File program, which allowed free electronic tax filing, was axed in March 2025 after facing bipartisan opposition from Republicans and lobbying by companies like Intuit (owner of TurboTax). The program’s cancellation is a gift to tax preparation firms: its 30 million eligible users in 2025 now face an average $140 fee for commercial services.

Investors should monitor:
- Intuit (INTU): Direct File’s elimination removes a key competitor, potentially boosting TurboTax’s customer base.
- H&R Block (HRB): Similarly positioned to benefit from the loss of a free alternative.

Critics argue Direct File’s termination prioritizes profit over public service, but the political calculus is clear. With tax prep companies lobbying heavily, this move aligns with Trump’s broader deregulatory agenda. The IRS’s internal directive to halt Direct File’s development also signals broader agency instability, a risk for firms relying on federal IT systems.

Blocking DeepSeek: A Tech Cold War Escalates

The administration’s crackdown on DeepSeek—a Chinese AI startup that outperformed U.S. rivals like ChatGPT—reflects escalating fears over China’s technological dominance. By March 2025, 12 U.S. states had banned DeepSeek on government devices, and Congress is pushing legislation to extend this nationwide.

Key players and risks:
- Nvidia (NVDA): Restrictions on its AI chip sales to China threaten a key revenue stream.
- Broadcom (AVGO): The company’s $61 billion takeover of VMware hangs in the balance as regulators scrutinize tech mergers amid national security concerns.
- AI Startups: U.S. firms may face steeper competition if China’s AI sector gains ground.

The House investigation into Nvidia’s alleged circumvention of export controls (via modified H100 chips) underscores the regulatory minefield. While bans on DeepSeek protect national security, they risk stifling innovation and inflating costs for U.S. tech firms reliant on global supply chains.

The Broader Investment Landscape: Winners and Losers

The administration’s dual focus on curbing federal programs and countering Chinese tech raises critical questions for investors:

Winners:

1. Tax Prep Firms: Direct File’s death is a tailwind for Intuit and H&R Block, which could see revenue jumps from previously untapped users.
2. National Security Contractors: Companies like Raytheon (RTN) or Palantir (PLTR) may benefit from increased federal spending on cybersecurity and AI oversight.

Losers:

1. AI Startups: DeepSeek’s ban signals a tougher regulatory environment for firms with foreign ties.
2. Semiconductor Firms: Export controls could crimp profits for Nvidia and Intel (INTC), though U.S. subsidies under Project Stargate may offset losses.

Neutral?

• The IRS: Its turmoil (layoffs, leadership changes) could lead to inefficiencies, but it’s not a stock to trade.

Conclusion: Profiting from Policy, Navigating Uncertainty

The Trump administration’s 2025 pivot toward private-sector interests and tech nationalism creates clear investment themes:

1. Tax Prep Plays: Back Intuit and H&R Block. The $140 average savings lost to Direct File’s termination translates to $4.2 billion in annual revenue gains for the industry.

2. Tech Cold War Risks: Avoid overexposure to China-linked firms. Instead, look to U.S. AI safety standards (e.g., NIST’s initiatives) as a growth area.

3. Regulatory Tailwinds: Monitor Project Stargate’s $500 billion AI funding and its beneficiaries, such as defense contractors or cloud providers like Microsoft (MSFT).

While these policies aim to boost U.S. competitiveness, they also risk inflationary pressures (higher tax prep costs) and stifling innovation. Investors must balance short-term gains (e.g., tax prep stocks) with long-term risks of a fragmented tech landscape.

The key takeaway? Follow the money—and the mandates. The Trump trade isn’t just about politics; it’s about where capital flows when governments pick winners and losers.

In this era of policy-driven markets, the winners will be those who read the tea leaves of Washington’s agenda—and bet accordingly.