The Trump Trade: Which ETFs Stand to Lose Most from a Second Donald Trump Presidency?

Electric vehicle (EV) ETFs

At July's Republican National Convention (RNC), Trump remarked that he would "end the electric vehicle mandate on day one" and save the U.S. auto industry from "complete obliteration." He also criticized subsidies for EV charging stations as a "ridiculous and incredible waste of taxpayer dollars."

Essentially, Trump aims to undo Biden's EV agenda and associated laws like the Inflation Reduction Act, various emission rules, and EV tax credits for consumers and manufacturers.

Some domestic manufacturers are almost certain to balk at this, especially Tesla. Others, such as Ford, which reported a $130,000 loss per Mach-E Mustang on 10,000 units sold in the first quarter of 2024, may use this as an excuse to pivot back to focusing on their internal combustion engine (ICE) lineup.

Whatever the result, it's likely to induce significant volatility for thematic EV ETFs, which have already been left battered and bruised from Tesla's roller-coaster performance throughout 2024, lowering growth in EV sales and penetration, and macro factors like elevated rates in the U.S. and weak consumer sentiment in China despite intensifying foreign competition from BYD.

ETFs to watch here include the KraneShares Electric Vehicles & Future Mobility Index ETF

, Global X Autonomous & Electric Vehicles ETF

DRIV

+0.64%

, iShares Self-Driving EV and Tech ETF

IDRV

+1.29%

, and Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF

EVMT

+0.87%

.

Clean energy ETFs

Given that Trump and the Republican Party's platform literally has a line saying "drill, baby, drill," it's no surprise they favor traditional fossil fuels like oil, gas, and thermal coal over clean energy.

There's history for this dating back to March 2019, when Trump, speaking to factory workers in Ohio, blasted Hillary Clinton and wind turbines (which he mistakenly referred to as windmills), claiming they lowered property values. He also criticized solar power as "not strong enough" and "very expensive."

In 2019, Trump also imposed tariffs on imported solar panels—duties of up to 30%—which were received negatively by the industry as they heavily depend on overseas parts for manufacturing. The result was job losses and higher project costs.

There's a lot at stake for the clean energy industry should Trump come back into office. Potential reductions or eliminations of the 30% Solar Tax Credit (ITC) for homeowners and businesses, state-level incentives, and again, Trump's favorite use of tariffs could impact the sector significantly.

ETFs to keep an eye on include Invesco Solar ETF

and First Trust Global Wind Energy ETF

FAN

+0.3%

for industry-specific applications, or the broader iShares Global Clean Energy ETF

ICLN

+1.42%

for overall clean energy exposure.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.