The Trump trade was one of the hottest trades in the first few weeks and months after the US election. It seemed to make a lot of sense to go for shares that would benefit from a shift in US policies.
One of the most obvious stocks that seemed like it would benefit was Tesla because of the close association between Elon Musk and Donald Trump.
Tesla was indeed a very strong performer – between 4 November 2024 and 17 December 2024, the Tesla share price climbed by 98%.
However, between 17 December 2024 and 18 March 2025, Tesla stock sank 51%. Ouch. It's now lower than it was on the day of the US election.
With this dramatic reversal of that specific Trump trade, it's worth asking whether the overall Trump trade is over.
Is the excitement over for the Trump trade?
Plenty of the US-focused ASX exchange-traded funds (ETFs) have suffered either high single-digit or low double-digit returns since mid-February. I'm thinking about names like Betashares Nasdaq 100 ETF (ASX: NDQ), Vanguard US Total Market Shares Index ETF (ASX: VTS), and Global X Fang+ ETF (ASX: FANG).
Those declines reflect the downgrade of optimism about stocks like Microsoft, Apple, Amazon, Alphabet, Meta Platforms, and so on.
When Trump was elected, investors may have hoped that Trump would reinvigorate the US economy, excite both households and businesses, lower taxes, and end both wars.
Looking at the situation currently, those goals haven't been achieved (yet). According to CNBC, US consumer sentiment dropped in March to its lowest level since 2022.
That initial Trump trade honeymoon period seems to be over for US businesses and the global share market overall.
There are a few business share prices that are higher than they were at the start of the year, such as BlueScope Steel Limited (ASX: BSL). That company owns a large steel plant in the US, which may benefit from increased US demand for domestic steel.
However, the possibility of there being further tariffs applied by the US on products from different countries could unsettle the market further.
But one possible tailwind for the global share market is the possibility of further interest rate cuts in the US. The US Federal Reserve said overnight that it is currently forecasting two more rate cuts this year. That can change, of course, but lower rates should, in theory, increase the value of most assets.
Where I'd now invest
For investors who regularly invest like clockwork in a good ETF, I think that strategy is good and can continue during this period.
With that in mind, there are three areas that could make sense for an investment following the 'Trump trade' market moves.
First, I'd look at good US shares that have been sold off amid this volatility. It's not often that the great US tech businesses drop around 10% or more from a recent peak.
Second, I'd look at solid ASX shares with good long-term outlooks that have declined significantly in recent times. I'm thinking of names like Brickworks Ltd (ASX: BKW), Pinnacle Investment Management Group Ltd (ASX: PNI), and Siteminder Ltd (ASX: SDR).
Third, if the uncertainty makes an investor want to avoid most ASX shares (or other assets), then defensive ASX shares could be a good answer in the meantime. I'd look at names like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Centuria Industrial REIT (ASX: CIP), and Rural Funds Group (ASX: RFF).
