According to a recent report by Boston Consulting Group, the combined tariffs on goods from China, Mexico, Canada and other countries could add $640 billion in costs to U.S. imports from its top trading partners.

These costs will be felt more acutely by companies and industries that are most reliant on imports from tariffed countries. Some examples include auto makers and auto parts, clothing companies and consumer electronics manufacturers, according to BCG.

But just because a company isn’t as exposed to importing goods doesn’t necessarily mean they are safe. Some investors have been n e rvous that additional tariffs could spark inflation. Since the Federal Reserve has successfully battled to get inflation down in the wake of the 2020 pandemic, investors are sensitive to anything that could push inflation back up.

“That’s going to be a big deal,” Mike Dickson, head of research at Horizon Investments, told MarketWatch. “I believe that some of the tariff fears and risk have contributed a little bit to inflation fears and risk. And as a result we’ve seen upward pressure on interest rates.”

Over the past few months, markets reacted strongly to news about inflation and interest rate cuts. This includes the steep stock market selloff on Dec. 18 following hawkish statements from the Fed on interest rates, as well as the market gain on Jan. 15 following better-than-expected data on CPI inflation .

According to reports, Trumps team of advisors were mulling the idea of instituting gradual tariff hikes in order to avoid a sudden spike in inflation. But until we know for sure what Trump’s tariff policies are, and how they impact inflation, investors will be watching for more clues.

Deregulation

In December, Trump said that he wants to eliminate ten old regulations for every new regulation that gets passed. Although it’s not yet clear exactly which regulations will get cut, Suzanne P. Clark, the president and chief executive of the U.S. Chamber of Commerce has said that the regulatory rollback will set the economy’s “animal spirits” free .

The financial industry is expected to be a big benefactor of the deregulation. The Wall Street Journal reported that Trump’s advisors were seeking to shrink or limit the influence of bank regulators. JP Morgan Chase chief executive Jamie Dimon said that Trump’s deregulation plans had bankers “dancing in the street” because it could lead to less rules about how banks lend money — and lending money is a key part of business for banks.

Stocks in the financials sector rallied hard after Trump won the election, with the S&P 500 Financials Sector Index XX:SP500.40 jumping almost 6.2% on Nov. 6. Financial stocks pushed higher in the following weeks before settling down around that Nov. 6 level going into the inauguration.

But the financials sector isn’t the only one that could see business benefit from less regulatory oversight. The energy sector could benefit from looser environmental regulations, as well as certain companies in the materials and industrials sectors.

Sterling noted that U.S. manufacturers had been dealing with an extended slowdown in the aftermath of the Covid-19 pandemic, but future growth could be catalyzed as “the regulation pendulum swings the other way.”

Taxes

Trump and the Republican-led Congress passed sweeping tax bill in 2017, and with parts of that bill set to expire in 2025, Trump is expected to extend those cuts as he takes office.

The 2017 tax bill cut corporate taxes to a flat 21%, but Trump has since proposed multiple times lowering it to 15%. Having to pay less in taxes could benefit any business by reducing costs and boosting profit margins, so investors are likely excited about the potential business tailwinds.

“The incoming administration is likely to prioritize domestic growth through policies including tax cuts, targeted fiscal stimulus, and deregulation,” Jonathan Coleman, a small-cap growth portfolio manager at Janus Henderson Investors, wrote in a note. “These approaches could provide support for small-cap stocks, which are more economically sensitive than their larger counterparts. We expect small-cap earnings growth could exceed that of large-cap stocks in 2025, aided by easier earnings comparisons.”

While corporate tax cuts take time to be felt by businesses, official tax policy news could inspire bullishness by investors.

Looking beyond the inauguration

Trump will give the first speech of his second term on Inauguration Day. And while there is much to talk about, investors might not get the answers they’re looking for on that day.

“Will Trump provide any real clues to the policy agenda? Probably not,” Steven Barrow, head of G10 strategy at Standard Bank, wrote in a note. “If it is anything like his 2017 inauguration speech it will be high on hyperbole, but low on specifics. That’s not too surprising. The inauguration is not a venue where the incoming president lays out details of his policies.”

And even if Trump fills his first week with policy announcements, those policies might not have an immediate or dramatic impact on the economy.

“Here’s the reality check: the U.S. economy isn’t a speedboat — it’s a massive supertanker. Even with the most aggressive policy changes, turning this ship takes time,” Adrian Helfert, chief investment officer at Westwood Holdings Group wrote.

Still, investors often pay attention to Trump’s remarks, and going into his second term there are still a handful of questions that remain unanswered. Although markets are closed on Jan. 20 due to Martin Luther King Jr. Day, some investors are bracing for volatility during the short trading week.