The Trump Trade Phases for 2025

Investing.com — Wolfe Research identified three distinct phases of what it calls the Trump Trade for 2025, highlighting shifts in market strategy as policy uncertainties evolve under the new U.S. administration.

Phase Overview

Wolfe expects investors to ‘price in’ the ‘Trump Trade’ in three phases:

1. First Phase: This phase has already passed, occurring immediately after the election.
2. Second Phase: To take place as the agenda is debated and implemented, especially during the first 100 days.
3. Third Phase: Following the emergence of data to signal whether Trump’s agenda’s collective impact is positive or negative for growth.

Market Expectations

In the first half of 2025, Wolfe anticipates that defensive growth stocks, including the “Magnificent Seven” tech giants, will outperform as investors navigate risks associated with tariffs, reconciliation bills, and other policies.

By the second half of the year, clarity on policies like deregulation and trade is likely to benefit sectors that experienced gains post-election, such as financials, industrials, and consumer discretionary stocks.

Wolfe believes the initial period of policy uncertainty will dampen enthusiasm for cyclical stocks, favoring secular growth plays instead. However, the passage of key legislation could act as a catalyst for market rotation later in the year.