Trump wins, now what?

After a historic, hard-fought campaign, businessman and real estate investor Donald Trump is set to become the 45th president of the United States. Given pre-election expectations, a Trump victory may not have been fully reflected in market prices, which could lead to a degree of near-term volatility as investors digest the news. In the end, however, what matters most to investors are key economic drivers like growth, interest rates, investor sentiment, and productivity gains. These drivers often move to their own rhythms, independent of whichever officials or parties happen to be in power. That said, there may be several notable ways the Trump presidency could impact the economy and markets.

Taxes—During the campaign, Trump offered a number of proposals related to tax policy. These included moving from seven to three tax brackets, streamlining deductions, repealing the estate tax, and cutting the corporate tax from 35% to 15%. He also proposed a one-time repatriation tax of 10% on corporate profits held overseas—a move that could enable corporations to use those funds for capital expenditures, dividends, or share repurchases. It’s worth noting, however, that some of these reforms may have a hard time winning approval by Congress. Many believe the likeliest to pass may be some form of tax repatriation and a watered-down tax cut on individuals and corporations.

Health care—One of Trump’s central campaign promises has been the full repeal of the Affordable Care Act (ACA). He also proposed the sale of health insurance across state lines and more favorable tax treatment on premiums. Whether Trump will be successful with ACA repeal will depend on the makeup and disposition of Congress, though it’s likely he’ll at least be able to roll back key parts of the law via presidential powers and the budgetary process. This could potentially boost several sectors of the health care industry, including pharmaceuticals. On the other hand, hospitals and Medicaid providers could suffer, as if they’ll no longer stand to benefit from the higher reimbursements provided by expanded coverage.

Regulatory environment—Based on Trump’s campaign proposals, he’s likely to seek to relax or overturn an array of government regulations. These include Dodd-Frank, the sweeping reform of Wall Street that passed in the wake of the 2008 financial crisis, and the Clean Power Plan, an initiative of the Environmental Protection Agency. In terms of energy policy, Trump has mentioned loosening restrictions on fracking and offshore drilling. Taken together, these actions could serve to benefit companies in a range of sectors—from financials to traditional energy companies, especially those focused on domestic oil exploration and production.

U.S. dollar and foreign affairs—Since Trump does not have traditional experience in foreign policy, this remains an area of some uncertainty. However, he’s consistently spoken out against free trade, and has had particularly contentious words for both Mexico and China. It’s possible that this may have just been campaign rhetoric. If not, and if Trump pursues policies in keeping with what he’s said during the campaign, trade tensions could escalate, and demand for U.S. dollars could wane. Investors may find both issues concerning, especially since strong demand for U.S. dollars has helped minimize inflation and keep yields on U.S. Treasuries at historically low levels.

Ultimately, only time will tell what the market impact of the Trump presidency will be. As with any presidential transition, especially from one party to the other, there may be some bumps in the days and weeks to come. With history as our guide, it’s likely, however, that these will subside as markets adjust.