US election: a summary of our views

The US election is a pivotal event, with wide-ranging implications for the US and global economies. We believe that the closely fought contest between the current Democratic vice-president, Kamala Harris, and the former Republican president, Donald Trump, is a toss-up. We have been exploring the implications of the contest for the US and globally in our “US election: its impact on…” series captured under our US 2024 elections theme. Our key views are summarised below.

Impact on the US economy, policy and business sectors

We see some divergence in US macroeconomic outcomes under the rival presidencies. In both cases, we still expect the US economy to remain fundamentally strong. However, under Mr Trump we would expect slightly weaker economic growth, higher inflation and a wider fiscal deficit than under Ms Harris. Consequently, we would expect a less smooth path to lower US interest rates under Mr Trump than under his rival, and probably a stronger US dollar as a result. The divergence mainly relates to likely differences in approach to trade, immigration and taxes.

  • Trade: Ms Harris would retain a protectionist tilt in US trade policy, with a primary focus on China. Mr Trump’s administration would seek broad application of tariffs and, although pushback from US businesses and trading partners will result in a watering down of proposals, we expect executive orders to force the adoption of some higher rates. These tariffs would increase prices for US consumers and also affect US exports as other economies respond with countermeasures. 
  • Immigration: policy towards immigration will tighten under either candidate, but Ms Harris would probably favour enhancing legal migration pathways, whereas Mr Trump would prioritise limiting immigration across the board. We see greater risk of labour market disruption and tightening under Mr Trump, with the effect of applying firmer upward pressure on prices. 
  • Tax: neither candidate is anxious about the wide US fiscal deficit. Nevertheless, with Ms Harris’s plans to raise revenue through higher corporation taxes and the phasing out of personal income tax cuts, the shortfall is likely to be narrower. Mr Trump hopes to make those tax cuts permanent, and although deregulation is a major campaign theme, he has not been drawn on specific offsetting spending cuts.  

Competition with China drives bipartisan consensus on some, but not all, domestic industrial and sectoral policies. Industrial policy and re- (or near-) shoring aspirations will remain central themes under either presidency, driven by competition with China. Mr Trump would probably tweak support for clean energy but maintain subsidies for semiconductors and technology; Ms Harris would largely continue current policies. Under either presidency, we expect that major domestic legislation will struggle to make its way through what we think is likely to be a divided Congress. Still, through executive actions and other measures, there will be scope to influence outcomes, and we expect some of the following sectoral impacts.

  • Automotive: Ms Harris would focus on reducing vehicle emissions by tightening fuel economy standards, encouraging electric vehicle (EV) adoption and boosting investment in US manufacturing of EVs, semiconductors and batteries. Mr Trump would pull back goals for reducing vehicle emissions, and his anti-China stance could slow the shift towards EVs.
  • Consumer goods and retail: A Harris victory would continue an anti-trust approach to regulation, ensuring continuing scrutiny on businesses to keep prices low for consumers. A Trump victory would probably lead to a more pro-business regulatory stance, but his tariff and immigration policies would cause disruption for many firms.
  • Energy: Ms Harris would continue with energy transition policies, meaning prioritising the fight against climate change and supporting the adoption of renewable energies, to meet the existing target of having an emission-free power sector by 2035. A Trump administration would weaken environmental regulation and reduce subsidies for renewable energy, while removing barriers to oil and gas production.
  • Financial services: a Harris administration would aim to align the US with global standards and remain vigilant about speculative, abusive or anti-competitive activities. Mr Trump would pursue softer rules for banks and other financial firms, including in cryptocurrency, and appoint more industry-friendly administrators.
  • Healthcare: Ms Harris would focus on risk-pooling and expanding access to healthcare, supported by increasing centralisation of the system. For Mr Trump, the priorities are consumer choice and transparency, with many decisions likely to be left to individual states, courts and providers. Ms Harris would seek to protect reproductive rights, in contrast to Mr Trump’s preference for enforcing state-level restrictions.
  • Technology: Mr Trump would probably be more hands-off than Ms Harris on competition and artificial intelligence, but stricter restrictions on immigration could affect recruitment in the tech sector.

US foreign policy would move in an isolationist direction under Mr Trump, but would retain a more traditional bearing under Ms Harris. Mr Trump’s “America-first” agenda would inject uncertainty into key US alliances and partnerships, especially on issues such as defence spending, trade imbalances and China ties. However, his more radical proposals, such as US withdrawal from NATO, are best seen as low-probability risks. Ms Harris would apply pressure on similar issues, but in the context of fuller support for long-standing relationships in Asia and Europe. There would be less US support for multilateral organisations under Mr Trump, and he would probably pull the US out of international climate negotiations. A Trump administration would focus more on “hard” power accumulation through higher defence spending to further US interests, whereas a Harris administration would retain “soft” power tools such as development and aid spending.

Impact on the global economy and geopolitics

The US election will have economic and geopolitical implications for the rest of the world. Given the higher level of discontinuity that we anticipate under Mr Trump, we explored some of the exposures for other geographies in the Trump Risk Index. This highlighted the vulnerability of US allies and major trading partners to shifts in US trade and security policy.

We have also explored specific regional outcomes under both presidencies.

  • Africa: Both candidates would seek to combat the geostrategic and commercial influence of China and Russia in Africa. Ms Harris would commit more to initiatives that support pan-African institutions, the region’s wider development agenda and the drive for greater regional economic integration. Mr Trump would focus on securing influence over strategic partners in Africa and access to their natural resources
  • Asia: US security alliances in East Asia would hold under either Ms Harris or Mr Trump, but demands on allies would rise notably under Mr Trump. The China-linked supply chains of South-east Asian economies would come under similar scrutiny, with punitive actions more likely under Mr Trump. A stronger US dollar under Mr Trump would reignite balance-of-payment pressures for some Asian economies.  
  • China: US-China economic disentanglement under Mr Trump would be more intense and broad-based than under Ms Harris, spreading across a wider subset of industries and areas of co-operation. A more confrontational period with the US would accelerate China’s efforts to stabilise its ties with US allies and improve those with non-Western countries.
  • Europe: We would expect more intense US pressure on European defence spending levels under Mr Trump than Ms Harris, and also a faster reduction in US aid for Ukraine. A blanket tariff on EU exports to the US would represent a major shock to the European economy, notably that of Germany, and one that we anticipate would elicit a countervailing response from the EU.
  • Latin America: Under Mr Trump, the region would probably face slower economic growth, higher inflation, steeper borrowing costs and more complicated foreign relations, especially regarding China. The regional outlook would be more benign under Ms Harris, although we would still expect some tightening of US policies on immigration and China ties.
  • Middle East: The US will remain militarily engaged in the Middle East regardless of the presidential election outcome. Both Ms Harris and Mr Trump are pressuring Israel to cease military action in Gaza and Lebanon. Mr Trump is more likely to align with right-wing Israeli policies, whereas Ms Harris may advocate for a two-state solution. Under either administration, Israel will continue to be a key US ally, driven by security concerns in the region, notably Iran.

Weaker US growth and the likely intensification of global trade conflicts point to a more challenging global growth outlook under Mr Trump than Ms Harris. Our analysis suggests that, among major markets, growth prospects would be among the most affected for China, Germany and Mexico under Mr Trump. The likelihood of higher US interest rates and a stronger US dollar would also extend local currency strains for some markets and complicate efforts to support local growth through monetary policy easing.

The analysis featured in this article can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.