January 2025, In the Loop
The executive actions on Day One of Donald Trump’s second term have so far proved to be less aggressive than many had feared. We highlight the key takeaways for investors below.
While Trump did indicate he plans on enacting tariffs as high as 25% on Mexico and Canada by February 1st, the lack of immediate action confirms the view that he will likely take a more pragmatic, rather than idealistic approach. Tariffs are likely to be used as a tool for negotiating more favorable terms with trading partners, meaning a significant rise in tariff rates may be avoided. While this is certainly not the final word on the subject, it can be viewed as a positive sign for markets.
Several actions were issued that focus on immigration reform, notably, an action seeking to end automatic birthright citizenship. Some of these actions will face legal challenges and the implementation of these orders will be challenging—so the ultimate impact is uncertain. Immigration reform is likely to put upward pressure on inflation, but this is unlikely to happen over the near-term. It could, however, impact longer term inflation expectations (Figure 1) and therefore continue to put upward pressure on longer term yields.
Promises were made to reverse “all regulations that impose undue burdens on energy production and use”, with the goal of decreasing oil prices, through increased supply. We remain skeptical of the impact these actions could have on energy prices over the medium to longer term. Energy producers in the U.S. have expressed an unwillingness to dramatically increase supply, on fears of over-supplying the market.
Performance data quoted represents past performance which is not a guarantee or a reliable indicator of future results.
Source: Bloomberg Finance, L.P.
IMPORTANT INFORMATION
Any specific securities identified and described are for informational purposes only and do not represent recommendations.
This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Performance data quoted represents past performance which is not a guarantee or a reliable indicator of future results. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the mate-rial is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.
Australia - Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. For Wholesale Clients only.
Canada - Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc.’s investment management services are only available to non-individual Accredited Investors and non-individual Permitted Clients as defined under National Instrument 45-106 and National Instrument 31-103, respectively. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services.
EEA - Unless indicated otherwise this material is issued and approved by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier. For Professional Clients only.
New Zealand - Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. No Interests are offered to the public. Accordingly, the Interests may not, directly or indirectly, be offered, sold or delivered in New Zealand, nor may any offering document or advertisement in relation to any offer of the Interests be distributed in New Zealand, other than in circumstances where there is no contravention of the Financial Markets Conduct Act 2013.
Switzerland - Issued in Switzerland by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.
UK - This material is issued and approved by T. Rowe Price International Ltd, Warwick Court, 5 Paternoster Square, London EC4M 7DX which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.
© 2025 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.