Flash update – Trump's inauguration and executive orders

President Donald Trump vowed for a new ‘golden age for America’ as he announced immediate overhauls of domestic and foreign policy, with 100+ executive orders already placed.

What executive orders have been placed?

• Trade disruption: President Trump stopped short of announcing new tariffs but instead announced that he planned to instruct government agencies to re-evaluate America’s trade relations. He also unveiled the setup of a new agency known as the External Revenue Service (ERS), which aims “to collect tariffs, duties, and all revenue” from foreign sources. In a subsequent speech, Trump alluded to imposing tariffs of up to 25% on imports from Canada and Mexico as early as February 1st while firing the first shot across the bow of both China and Europe.
• Immigration: Using strong rhetoric, Trump declared a national emergency at the US-Mexico border, deploying military assets to “erect physical barriers.” He vowed to reinstate his ‘Remain in Mexico’ policy, first implemented in 2019 and later reversed by Biden, to halt illegal entry and begin deportation processes.
• Energy and climate: Trump declared a national energy emergency to increase domestic energy production and reverse climate-related policies. As a result, he immediately plans to ‘drill baby drill’ for ‘liquid gold’, crucially by opening new areas to oil and gas exploration, with a focus on Alaska. He has also begun withdrawing from the Paris Climate Accord and intends to revoke the electric vehicle mandate and the Green New Deal.
• Panama Canal: Trump also pledged to ‘take back’ the Panama Canal, in which control was transferred to Panama from the US in 1999, due to beliefs that the Treaty had been violated. Panama’s President has stated that the Canal will remain under Panamanian control.

How did markets react?

• Equity and bond market reactions were relatively positive, with markets rallying on the day. Currency markets saw a greater reaction. Prior to Trump committing to tariffs, the US dollar index actually weakened by c.-1.1%. Following his comments about potentially imposing tariffs, the Canadian dollar and Mexican peso initially slumped by c.-1.5% versus the US dollar due to uncertainty.
• Looking forward, markets will focus on Trump’s first 100 days in office, as this should give a steer as to what type of second term we can expect. Uncertainty in markets seems to be the name of the game in 2025, with numerous variables to consider. This is particularly evident when trying to understand how many of President Trump’s policies will be implemented.

How are we positioned in our Multi-Asset Active portfolio?

• Although there may be short-term shifts and volatility, we strategically invest with a risk-first approach and maintain a globally diversified portfolio.
• From a tactical positioning perspective, we have several positions related to US equities:

• • We are overweight the S&P500 due to the continued strong performance of corporate earnings and the resiliency of the US economy.

• • We are also overweight US banks versus the S&P 500 as banks could be the first to benefit from Trump’s deregulation and fiscal stimulus, and interest rates remain higher for longer.

• • We are overweight the S&P 500 versus Emerging Market equities. China, which currently makes up about 30% of the index, faces structural economic challenges to generate growth, which could be further impacted by potential tariffs.

Any companies or markets mentioned are for illustrative purposes only and not intended to be investment recommendations. For more information on the benefits and risks of investing please see our Your Investment Guide brochure.

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (Aviva Investors). Unless stated otherwise any opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested.

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