Exploring the sectors Australian investors should watch under Trump 2.0

Please note this interview was filmed on 13 March 2025.

Under Trump 2.0, US exceptionalism is set to continue, creating new opportunities for Australian investors beyond the dominance of tech stocks in recent years.

With key policies such as tax cuts, trade tariffs and a strong focus on innovation, the US economy is positioning itself for robust growth. Australian investors can capitalise on this through targeted opportunities in sectors including American industrials, healthcare and energy.

Billy Leung, Senior Investment Strategist at Global X, points out that while the US is projected to lead global GDP growth at 2.1% in 2025, the real opportunities lie in those diverse sectors, which stand to benefit from the continuation of Trump’s policies.

However, risks remain, as market volatility is likely to persist due to ongoing tariff negotiations and uncertainties in global trade.

In this episode of The Pitch, Leung discusses how Trump’s policies will impact these sectors, and how Australian investors can take advantage of the opportunities while protecting themselves from risks.

This is the first of three interviews with Leung, where he shares ETF ideas for growth, income, and defensive investors across the episodes.

Edited transcript

What are the key Trump policies you're watching right now?

Trump is still following through with his vision from his first administration. One key area to watch is trade policies and tariffs. We’ve already seen tariffs imposed on Mexico, Canada and China. The expectation for tariffs was very high going into this, but the tariffs we’re seeing are about 20-30%, not 60% as originally expected. 

Another important policy is the continuation of the 2017 tax cuts, which are likely to remain in place, so US tax levels will stay where they are, rather than going back to their original rates.

Let’s focus on tax and the Republicans' plan to extend the US$4.5 trillion Trump tax cuts from 2018. If that goes through, who benefits and what are the hidden risks?

When you look at tax cuts, one of the things to focus on is companies that are most sensitive to lower taxation rates. A lot of these will be more domestic-focused companies, like industrial companies, even financial companies, and healthcare companies, which have traditionally paid higher taxes compared to more tech-focused or innovation-driven companies, which already benefit from a lot of tax advantages. 

So I would say the beneficiaries of these cuts will mostly be sectors like financials, healthcare, and industrials.

In terms of hidden risks, we need to look at whether tech companies will be paying more or less tax. What’s interesting is that there’s a misconception that a lot of the major tech names, such as Amazon, Facebook and Meta, are paying very low taxes. 

But if you look at their annual reports and recent results, they actually pay quite a high effective tax rate - around 19-21%. 

The risk - or even the upside risk - is that some of these innovative companies could benefit if the tax cuts continue.

US real GDP growth is forecast at 2.1% in 2025, outpacing other developed markets. Do you see this growth helping other sectors of the economy and how should investors position for that?

Yes, we definitely agree with that, and we strongly believe that US exceptionalism is driven by higher growth. We also agree that growth will be more broad-based. What we’ve seen in 2024 was that the S&P 500 was very much tilted towards IT and tech growth, and some consumer growth as well. 

But in 2025, we’re seeing that the S&P 500’s growth will be much more diversified, with growth in sectors like healthcare, energy, industrials and financials. 

So, while we’re not saying to sell off your mega-tech names, we do think there’s a strong case to expand your exposure to other segments of the market, like industrials, financials, and healthcare, which were lagging in 2024.

Despite the strong outlook, there are risks about the impact of trade wars, inflation and what that means for interest rates. What’s the best way for investors to hedge against these risks?

We’re still telling investors that there’s a very strong case for equities, but we understand there’s a spectrum of risk as well. What we've suggested is that investors continue to hold their core equity portfolio holdings, whether US or Australia, but also consider ways to minimise or manage the risk.

One option is gold, which has always been a strong hedge against inflation and, which we offer via Global X Physical Gold, remains an important asset in a portfolio.

Another option is using income-generating products, such as covered call strategies, which offer a good blend of income along with exposure to the underlying equities, providing higher income generation with some downside protection.

We’re also seeing some very interesting fixed-income products emerging in the Australian market, and we’re actively participating in this space. At Global X, we offer the Global X Australian Bank Credit ETF which gives investors exposure to major banks' debt in their portfolio, providing a 6% running yield annually, paid monthly.

These products help can hedge against volatility while generating income during times of uncertainty.