Tax & Fiscal

Extend 2017 tax cuts, SALT deduction at risk
Lower corporate taxes from 21% to 20%
Increase defense spending
Low risk of debt ceiling standoff

2017 tax cuts renewed, but with some increased taxes offsetting deficit increase

Corporate tax rate unchanged at 21%
High risk of debt ceiling standoff

2017 tax cuts renewed, but taxes raised for top earners

Increase corporate taxes from 21% to 25%
Highest risk of debt ceiling standoff

Renew 2017 tax cuts, but raise taxes for top earners
Raise corporate taxes rate from 21% to 28%
More social spending

Low risk of debt ceiling standoff

Tariffs and Immigration

10% tariff on all imports
60% tariffs on China (likely lower after negotiation)
Deport 1-7mn undocumented immigrants

10% tariff on all imports
60% tariffs on China (likely lower after negotiation)
Deport 1-2mn undocumented immigrants

Current tariffs maintained
Tighter border policy, but no deportations

Current tariffs maintained
Tighter border policy, but no deportations

Republican Congress

Trump White House

Split Congress

Split Congress

Democrat White House

Democrat Congress

Source: TD Securities

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Source: TD Securities

USD negative, favoring ROW over US equities
U.S. current account becomes an issue

USD negative, reflecting status quo
Frictions with China, but no trade war

U.S. equities still outperform ROW, supporting USD

USD positive as Trump still has power over tariffs 
and trade policy

Very USD bullish as equities and macro favor USD
Tariffs favor U.S. growth over Europe, China

FX Implications

Risk negative amid expectations of more regulation and business unfriendly policies

Higher regulation to weigh on sentiment

Risk asset positive amid expectations of policy gridlock

Tariff/deportations remain source of uncertainty

Risk asset positive amid expectations of deregulation

Tariff/deportations remain source of uncertainty

Risk asset positive amid expectations 
of deregulation

Equity Implications

Bull steepening as market focuses on inflation/growth
Lower debt ceiling standoff risks

Debt ceiling standoff could accelerate 
bull steepening

Gradual bull steepening as market focuses 
on inflation/growth

TIPS BEs widen on rising inflation expectations

Initial bear steepening likely to turn into bear flattening amid Fed on hold

TIPS BEs widen on rising inflation expectations

Initial bear steepening likely to turn into bear flattening amid Fed on hold

Rates Implications

Gradual easing to 3% neutral rate

Gradual easing to 3% neutral rate

After H1 2025 reassessment, resume gradual cuts

Pause rate cuts and monitor 
inflation/growth shock

Harder landing brings additional cuts, with rates reaching 2% by 2026

Pause rate cuts and monitor 
inflation/growth shock

Fed Reaction

No material impact on inflation/growth

No material impact on inflation/growth

Negative GDP growth impact of 0.8-1.2pp by 2026

Tariffs and immigration raise inflation profile 
by 0.8-1.0pp in 2025

Negative GDP growth impact of 1.0-2.0pp by 2026

Tariffs and immigration raise inflation profile 
by 0.9-1.3pp in 2025

Growth and Inflation

Further support for pro-ESG/IRA policies

Pro-ESG/IRA policies to continue

Roll back regulation
Threaten Fed independence
Attempt to remove SEC/other agency heads

Roll back regulation
Threaten Fed independence
Attempt to remove SEC/other agency heads

Regulation

Current tariffs maintained
Tighter border policy, but no deportations

Current tariffs maintained
Tighter border policy, but no deportations

10% tariff on all imports
60% tariffs on China (likely lower after negotiation)
Deport 1-2mn undocumented immigrants

10% tariff on all imports
60% tariffs on China (likely lower after negotiation)
Deport 1-7mn undocumented immigrants

Tariffs and Immigration

Renew 2017 tax cuts, but raise taxes for top earners
Raise corporate taxes rate from 21% to 28%
More social spending

Increase corporate taxes from 21% to 25%
Highest risk of debt ceiling standoff

2017 tax cuts renewed, but taxes raised for top earners

Corporate tax rate unchanged at 21%
High risk of debt ceiling standoff

2017 tax cuts renewed, but with some increased taxes offsetting deficit increase

Extend 2017 tax cuts, SALT deduction at risk
Lower corporate taxes from 21% to 20%
Increase defense spending
Low risk of debt ceiling standoff

Tax & Fiscal

Democrat Congress

Split Congress

Democrat White House

Split Congress

Republican Congress

Trump White House

FX Implications

Equity Implications

Rates Implications

Fed Reaction

Growth & Inflation

Regulation

Tariffs & Immigration

Tax & Fiscal