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박재훈투영인 프로필 사진박재훈투영인
United States: A hotly contested election could lead to economic overheating(31 / 10 / 2024)
created At: 2/12/2025
Sell
Sell
This analysis includes a sell recommendation. Please carefully review all mentioned risk before proceeding.
453870
TIGER India Nifty 50
226490
Samsung KODEX KOSPI ETF
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Fact
Presidential election between Trump and Harris on November 5th Republicans need 2 Senate seats, Democrats need 4 House seats Trump pledges 60% tariffs on Chinese imports Trump proposes 15% corporate tax rate Harris plans tax increases on corporations and wealthy Both platforms involve substantial public spending Key swing states remain undecided Fed independence potentially at risk under Trump
Opinion
The political situation shows deeply troubling signs for economic stability. The combination of uncertain election outcome and drastically different economic policies creates significant market risks. Most concerning is how both candidates' platforms could trigger inflation through different mechanisms - Trump through tariffs and deficits, Harris through social spending - while the potential threat to Fed independence under Trump could limit monetary policy options. The prospect of divided government adds another layer of uncertainty.
Core Sell Point
The combination of extreme policy divergence between candidates, potential Fed independence threats, and likely divided government suggests increased risk of market volatility and economic instability regardless of election outcome.

An election with uncertain result

On November 5th, Americans will head to the polls to decide between former President Donald Trump (Republican) and sitting Vice President Kamala Harris (Democrat). The outcome hinges on a few key "swing states" where no clear favorite has emerged. In addition to the presidency, control of Congress is at stake: Republicans need only two seats to reclaim the Senate, while Democrats need a net gain of four to take back the House. A divided Congress is likely, though a trifecta – control of both chambers and the presidency by one party – remains possible.

Protectionism and trade risks

A second Trump presidency would likely escalate protectionist trade policies, including substantial tariffs on imports, particularly from China. Trump has already pledged a 60% tariff on Chinese imports and broader tariffs on U.S. allies, which could severely disrupt global supply chains and raise costs for American businesses.

In contrast, Harris would likely continue a more strategic and measured approach to trade, focusing on targeted restrictions, especially concerning China. However, trade tensions are expected to persist, especially in the technology and energy sectors.

Diverging fiscal visions

Harris and Trump present significantly different fiscal policies. Harris aims to raise taxes on corporations and the wealthy, offering tax relief to lower-income families. Her platform emphasizes public investment in green infrastructure and social programs, seeking to reduce income inequality.

Trump, for his part, wants to extend and broaden the tax cuts he introduced in 2017 and is also considering a cut in corporation tax to 15%. Furthermore, his approach is based on deregulating key sectors to promote economic growth, at the risk of increasing the public deficit.

Inflation and economic uncertainty

Both candidates’ platforms involve substantial public spending, raising concerns about inflation and interest rates. While household consumption is solid, a spike in inflation triggered by the implementation of either candidate's election manifesto could force the Federal Reserve to adopt a more restrictive monetary policy, thereby raising interest rates.

Despite these risks, the U.S. dollar remains globally strong, ensuring favorable financing conditions for the country. However, should the Fed's independence come under threat in a second Trump term, confidence in U.S. monetary policy could waver, increasing global economic uncertainty.

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