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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.