In the intriguing landscape of American politics, the potential economic and political ramifications of either a Trump or Harris administration loom large, like storm clouds ready to burst. With the nation’s public debt soaring to a staggering 108% of GDP, one might think the candidates would race to prioritize its reduction. Meanwhile, Joe Biden, branded a “lame duck,” may find his ambitions stifled or, in a twist of fate, redouble his efforts to fuel the economy in these waning days, perhaps through the soaring aspirations of Kamala Harris.
An administration led by Harris raises questions: Could we witness a more robust antitrust agenda than Biden’s? The answer remains shrouded in uncertainty, primarily because the Federal Trade Commission and the Department of Justice face litigation hurdles at every turn. Harris’s flirtation with corporate backing indicates a reluctance to govern from the far left, leaving investors eager to decipher her views on capitalism and corporate profit.
Conversely, the specter of another Trump presidency projects its own veil of uncertainty. Will he successfully impose the sweeping tariffs he proposes? How far might he push on border enforcement and trade policy? The interplay of Trump’s policies in these domains could significantly influence inflation and growth, while his term would likely herald deregulation and the avoidance of tax hikes.
With public debt at unprecedented heights, differences between the candidates become stark. The Congressional Budget Office warns that extending Trump’s 2017 tax cuts will add trillions to the debt in the decades to come. While some argue that such cuts — particularly the corporate tax rate reduction — spurred economic growth, Harris might allow these cuts to fade or limit their benefits, possibly raising the corporate tax rate instead. Long-term solutions to the debt crisis may necessitate profound reforms in social entitlements: Social Security, Medicare, and Medicaid.
Trump’s ambition includes sweeping tariffs on Chinese goods, conjuring both challenges and opportunities. While presidents possess some leeway in implementing tariffs, they are not free from legal challenges. A blanket 10% tariff on all imports could be vulnerable to judicial scrutiny. Trump may find greater success in selective tariffs, especially if framed under national security or if foreign governments are seen to be unfairly subsidizing exports.
On the other hand, Harris has positioned herself against free trade deals, opposing both the Trans-Pacific Partnership and the US-Mexico-Canada Agreement due to labor and environmental concerns. Should the future administration operate under a divided government — perhaps the most likely scenario — the delicate dance of legislation will require deft maneuvering. In a climate of polarization, past presidents have often pushed through what they can when their party holds Congress, opting for a more conciliatory approach in split scenarios.
According to Piper Sandler analysts, only one of five economic indicators favors Harris: poverty rates. In dissecting election outcomes, a Republican Senate seems plausible, while the House may hang in precarious balance, setting the stage for a possible Republican encore and a diminished chance for a Democratic triumph.
The global export web, tightly woven with European markets, has oscillated with Trump’s prospects. In contrast, the so-called “Magnificent Seven” have seen variances aligned with Trump’s intentions to lift Biden’s regulatory constraints on AI. Given Harris’s previous support for Medicare for All, healthcare companies might find themselves grappling with challenges if her victory appears likely.
Should Trump emerge victorious, a surge in oil production might follow; however, with current production levels so high, the extent of this surge remains debatable. Such a drop in energy costs could soothe inflation’s bite and foster growth. Financial sectors may flourish under Trump’s oversight, buoyed by mergers, a steepening yield curve, and lighter regulation. Industrials and cyclical stocks could also rise favorably after a Trump victory.
Conversely, Harris’s victory would likely nurture the electric vehicle and green technology sectors. Yet, ultimately, market movements will respond more robustly to economic indicators than to poll readings. The S&P 500, for instance, rallied over 21% in the year following Trump’s triumph in 2016, though sector strains related to his rise only lingered briefly. As we wade into this unprecedented electoral year, one candidate will emerge victorious, but the question remains: what lies ahead?
Thus, the unfolding drama of American politics promises to be as unpredictable as it is consequential, echoing through corridors of power, economic institutions, and the lives of everyday citizens.
