Economic and Market Impacts of a Trump vs. Harris Victory
The outcome of the 2024 US presidential election could shape the economy and financial markets. Whether Donald Trump or Kamala Harris secures victory, different policies will lead to varying economic impacts.
Trump Administration: More Tax Cuts and Tariff Volatility
A Trump victory could introduce significant changes, especially regarding taxes and tariffs. Some key points to consider:
- Corporate Tax Cuts: A proposed 1% cut in the corporate tax rate might not dramatically shift markets, but larger reductions could boost corporate profits.
- Tariffs and Trade Wars: Trump’s focus on increasing tariffs with China and other nations could lead to market volatility. Higher tariffs, viewed as a tax on consumption, might reduce economic growth and raise inflation.
- Impact on the US Dollar: Despite Trump’s desire for a weaker dollar, tariffs could paradoxically strengthen it.
Trump’s previous use of tariffs as a negotiation tool resulted in the USMCA, replacing NAFTA, and it’s expected that tariffs would still feature heavily in future trade negotiations. Additionally, although Trump has expressed a desire to influence monetary policy, significant changes to the Federal Reserve are unlikely.
Harris Administration: Continuity with Current Policies
If Kamala Harris wins, her administration is expected to maintain policies similar to those of the Biden administration. Key elements include:
- Tax Policy: Tax increases, such as the expiration of some of Trump’s 2017 tax cuts, might affect household income, but public spending could offset this.
- Trade Relations: Tight trade relations with China would persist, though the overall economic and market impacts are expected to be minimal.
Immigration Policy: Diverging Approaches
Both candidates have different stances on immigration, which may affect labour market dynamics and GDP growth. Trump aims to reduce immigration significantly, which could slow GDP growth, though the current balanced labour market may lessen the impact. Harris is likely to maintain a more moderate immigration policy.
Conclusion: Uncertainty vs. Stability
The 2024 US presidential election presents two distinct paths for the economy:
- Trump’s presidency may bring more uncertainty, but with potential stock market gains from corporate tax cuts.
- Harris’ administration would provide more stability, with minimal changes in the short term.
ContinuumFP is here to help
Regardless of the outcome of the US Presidential Election this year, our team of advisers, analysts and strategists are ready to ensure your portfolio stays strategically ready. To discuss a review of your portfolio, arrange an appointment with one of our advisers by –
- phone our office (on 07-34213456), or
- at your convenience, use the Book A Meeting facility.
(Originally posted in October 2024.)
