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Chris Turner, ING’s global head of markets, has looked at potential US tariffs.

The big day has finally arrived. Financial markets are on tenterhooks to see what executive orders newly elected US President Donald Trump will enact on his first day. There’s a lot of focus on immigration controls and declaring a national energy emergency to allow more US oil and gas production. Currency markets are most interested in what he has to say about tariffs and what kind of pain the Oval Office plans to inflict on major trade partners. At last week’s nomination hearings, incoming Treasury Secretary Scott Bessent said that tariffs would be needed to address unfair trade practices, support government revenue, and to be used as a negotiating tool.

In terms of what is currently priced for tariffs by financial markets, we find the online prediction websites quite useful, such as Polymarket and Kalshi. Polymarket is running a book on which countries will receive US tariffs in Trump’s first week. China is priced at 56%, Mexico at 54%, Canada at 45% and the European Union at just 7%. There is also the case – using Scott Bessent’s remarks about tariffs as negotiating tools – that the new administration goes in on tariffs hard at the outset. That is why after a near 10% rally from late September, the dollar today is less than one percent off its recent high.

A new year, a new president. The lead up to Trump’s presidency has been noisy and, at times, divisive. Markets hate uncertainty though, and the simple fact of having the new president settled in the White House may prove to be a good thing for markets. Over the next few weeks and months, we (and the rest of the world) will be watching closely, listening to the speeches and analysing the policies. No doubt some will have a more positive impact on markets than others – expect some fireworks and associated volatility as we navigate the next four years.

This notwithstanding, there are good reasons to believe that the impact on the US stock market could be positive, and particularly so for smaller companies. Because trade tariffs, Trump’s most talked-about policy, favour domestic businesses over international conglomerates, and smaller companies are usually more domestically focused. During campaigning, and since the election, we heard a lot about tariffs. We expect the reality to be a little more muted than the campaign chat, but nonetheless at least some new tariffs are likely, particularly when it comes to Chinese trade.