The latest opinion polls point to a very tight result in November’s presidential election, but how could the economic policies of Kamala Harris or Donald Trump impact investment portfolios?
Tax cuts, deregulation and tariffs
Both candidates have already shown their economic colours to some extent – Trump through his first term as president and Harris in the past four years as vice-president.
Trump’s policies are expected to be a continuation of those seen during his presidency, namely tax cuts, deregulation and international trade barriers.
His Tax Cuts and Jobs Act 2017 cut corporate tax from 35 per cent to 21 per cent and provided temporary cuts for individuals to stimulate economic growth. His administration focused on deregulating various industries, especially energy and finance, with the former seeing environmental regulations rolled back to boost the fossil fuel industry.
There are question marks over whether there will be as much scope for fiscal largesse as last time, should Trump win.
Trump’s presidency represented a tilt towards a more hawkish stance on China, which President Biden also embraced. Trump’s most anti-free market policy was the imposition of tariffs on imports, especially from China, while the strict immigration restrictions he imposed were another example of his protectionism towards US jobs and wages.
More tax, homes and workers’ rights
For Harris, a key question is the extent to which she will continue the policies of the Biden administration while distancing herself from the cost of living crisis it is associated with.
Her policies focus on empowering the middle class, ensuing affordable healthcare and housing, imposing more progressive taxation and reducing income inequality through providing broader economic support.
Her housing initiative includes building 3mn new housing units with tax incentives for builders of affordable homes, while she would also extend the Biden administration’s efforts to cut the cost of prescription medication.
She wants to give more rights to workers to organise and bargain collectively, create jobs by promoting investment in the US and lower the costs of childcare, education and long-term care.
Comparing the two
Much could be said about the potential relative impacts of both candidates’ economic policies.
The failed attempt on Trump’s life led to a bump in the polls, which resulted in a brief ‘Trump trade’. The US dollar and stocks moved higher while 10-year treasuries dipped on greater expectations that his presidency would lead to greater government spending, looser regulations and corporate tax cuts.
On the other hand, Harris’s homebuilding plans could be seen as supportive of the housing industry. Although her policies could be seen as more pro-international trade, it should be remembered that the Biden administration continued the anti-Chinese restrictions imposed by Trump that resulted in trade wars and higher prices for consumers.
This anti-China stance could be understood to be an essential ‘American’ policy to reduce reliance on China in an increasingly multi-polar world.
