If you’re going to invest in American stocks, there’s an important fact about United States politics that you should keep in mind. Specifically, each of the political parties has sectors of the economy that tend to support it more than the opposing party. Furthermore, when Republicans and Democrats are in office, they usually reward their supporters and often take steps to harm the opposing party’s backers. This means that if a certain party wins, you can expect some stocks to surge.

Moreover, in our system, the party that controls the White House has tremendous power over regulators and often can get Congress to pass much of its agenda. Consequently, investing in sectors backed by the party that controls the White House is often very profitable. With less than 40% of Americans approving of President Joe Biden’s performance in many polls, it’s certainly quite possible for a Republican to become president in 2025. Here are three stocks that could surge if a Republican president wins.

Exxon Mobil (XOM)

The electric-vehicle revolution has caused the demand for gasoline to peak in the U.S and Europe, Bloomberg reported last August. Consequently, as EV sales continue to rise, the demand for oil in America and Europe is likely to sink, significantly undermining Exxon Mobil’s (NYSE:XOM) financial results.

Not only will XOM sell less oil as a result of this trend, but weakening demand will put significant downward pressure on oil prices, further hurting the company’s performance and pushing down XOM stock.

A Republican president won’t be able to stop this trend in the U.S., let alone in Europe. But he or she could greatly slow it down in America by eliminating the tax breaks that the Biden administration has provided to the buyers of many EVs.

In theory, a Republican administration could also enact tax regulations that would disincentivize the sale and purchase of EVs and push Congress to enact laws that would have the same effect.

As such a trend unfolds in 2025, oil prices are likely to climb, meaningfully lifting XOM stock.

JPMorgan (JPM)

The Biden administration’s banking regulators have unveiled a proposal to increase the amount of the Tier 1 equity capital that the nation’s largest banks have to hold by 19%. As a result, these banks, including JPMorgan, will have significantly less money to lend to consumers and businesses. They will also have less funds with which to buy stocks and bond and park at the Federal Reserve in exchange for interest payments.

Consequently, the Basel III rules will have a significant, negative impact on the financial performance of these banks, including JPM..

In general, Republicans tend to support greatly easing regulations on banks. For example, former President Donald Trump’s administration passed laws that eased regulations on banks which had been imposed by Obama-era legislation.

So, it’s a good bet that the next Republican president will look to roll back the Basel III rules, causing JPM’s top and bottom lines to be meaningfully higher than they otherwise would have been.

As a result, JPM is one of the top stocks that could surge if a Republican becomes president.

The Global X Defense Tech ETF (SHLD)

The Biden administration has been a big backer of the Ukraine War and has provided Israel with weapons that have enabled it to effectively fight Hamas. These policies are certainly positive for U.S. arms makers.

Still, the GOP tends to be more interested than Democrats in funding expensive, high-tech military projects. As a result, I view the Global X Defense Tech ETF (NYSEArca:SHLD) as a good name to buy if the GOP does win the 2024 presidential election.

Among the historical examples of GOP presidents spending large amounts on defense projects are President Ronald Reagan’s high expenditures on on missile defense and President Trump’s launch of the Space Force.

Also noteworthy is that former Governor Nikki Haley, one of the leading GOP candidates for president, has historically been a big backer of increasing defense spending.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines