As the United States prepares to elect its new president, many analysts have outlined what a Trump victory could mean for the global economy. On the other hand, what could Europe expect from Harris?
“My presidency will not be a continuation of my presidency” Joe Biden” said the Democratic candidate Kamala Harris I was talking to ‘Fox News’ last month. In terms of domestic politics, this may be true. Experts noted specific policy areas on trade and other issues where Vice President Harris is willing to diverge from her predecessor.
But looking further afield, Harris’ victory in next week’s election is unlikely to trigger major changes globally. At least from an economic perspective. It is not possible to say the same for his opponent’s possible victory. Donald TrumpHe is also vying for the keys to the White House.
“The main point that can be made in the event of a Harris victory would be symmetrically: No negative economic impacts What awaits Europe if Trump continues this move? tariff plans” says Aurélien Saussay, research professor at LSE’s Grantham Research Institute.
Duty
Considering what a Harris victory could mean for Europe, Saussay underlined Trump’s stance on tariffs and argued that it was important to understand the alternative to the Democrats’ victory. Embers He repeatedly stated that he would bring it. 10 universal taxesor 20% For all products produced abroad.
He also made an offer 60% import tariff Customs duties are added to Chinese products 100% on all imported vehiclesregardless of your country of origin.
“Donald Trump’s proposal to increase tariffs, framed as measures to correct trade imbalances and protect industries in the United States, has the potential to significantly reshape international trade relations and supply chains with notable consequences for the European Union,” Saussay said. he said.
“Some European sectors, especially German automobile industrywill be disproportionately affected. Although the 100 percent vehicle tariff specifically targets China’s electric vehicles, Germany will still face the risk of taking an economic hit.” According to the latest data from Germany’s Federal Statistical Office, the country’s largest export market in 2023 was the United States It is followed by France, the Netherlands and China.
Andrew Kenningham, chief European economist at Capital Economics, told Euronews that unlike Trump: Harris “will not impose widespread tariffs, and even less so on strategic allies like Europe.”.
trade wars
Harris is likely to maintain his strict trade policy towards China, although blanket tariffs are not expected to be imposed on European allies. Biden announced a series of tariffs on imports from this country this year.
Electric vehicles are subject to 100% tariff. This rate was determined as 50 percent for solar cells and 25 percent for EV batteries, critical minerals, steel and aluminum. considering Europe is more dependent on China than the USATrade policies are likely to remain a sticking point.
Looks like whoever wins the presidential race wins. There will be pressure on the EU to restrict trade with Beijing. China is the EU’s largest goods trading partner after the US, and bilateral trade is expected to reach €739 billion in 2023.
ecological policy
Emily Mansfield, regional director for Europe at the Economist Intelligence Unit, told Euronews that green policy could also be a solution. “high point” In relations between the EU and the USA in case Harris is elected.
“Subsidies to the IRA in the United States (which Harris will pursue) are controversial in Europe as they risk attracting green investments outside the EU,” he explained. “And new US regulationsE as limit adjustment mechanism carbon (CBAM) and EU regulation deforestation “EUDR, which will come into force in 2026, will increase the costs of US companies exporting to the EU,” he said.
CBAM imposes a carbon tax on some imported products entering the EU to prevent companies from outsourcing their production to countries with less stringent climate regulations. EUDR prohibits the import into the EU of products linked to deforestation practices.
Despite this potential for disagreement, “a Harris victory means in general stability for Europe in terms of economic impact,” Mansfield concluded.
ADVERTfiscal policy
Many analysts predict that if Donald Trump wins the election next week, inflation It may start to rise again. This is due to import tariffs, which will increase the price of foreign products brought into the United States.
Proposed tax cuts and proposals to deport immigrant workers could also increase costs. Could be a problem if inflation increases increase in interest rates If the Federal Reserve deems it necessary to cool the economy. This will cause bond yields to rise, which will mean the government will borrow at a higher interest rate.
It should also be noted that higher interest rates and bond yields can increase interest rates. dollar value. This is because the expectation of higher returns generally increases demand for the currency from foreign investors.
Changes in U.S. yields “will tend to increase European government bond yields, although to a lesser extent,” according to one note. Capital Economy “But other factors, such as the outlook for monetary policy from the European Central Bank and fiscal concerns in the eurozone, will remain the main drivers of the bond market.”
ADVERTThe note also made the following prediction: euro It would not be greatly weakened by Trump’s victory. Commenting on Harris’ possible victory, Capital Economics’ Andrew Kenningham told ‘Euronews’ that the Democratic candidate “probably won’t ease fiscal policy substantially.” He added that in this case there would be “no reason to expect higher interest rates or a stronger dollar in the US.”
Although Trump is expected to increase spending, Syracuse University economist and professor Carl J. Schramm argued: Harris will also sharply increase national debt if electedThis could raise interest rates.
“His approach will undoubtedly be guided by the Obama/Biden economic team, which has proven to be thoroughly Keynesian in its outlook and action,” he argued. “Spend and expand the public budget without taking into account long-term debt and the impact on the dollar,” he explained.
According to a study released last month by the Committee for a Responsible Federal Budget, Trump will add 7.5 tons to the US national debt, Harris will add 3.5 tons.
ADVERTA divided Congress?
In addition to voting for president next week, American citizens will also vote on a number of other positions, most notably who they want in office. Congress.
“Regardless of who wins the presidential election, the composition of Congress great importancebecause it will determine the aggressiveness of the candidates tax schedule“says Ryan Sweet, chief economist at Oxford Economics.
If Democrats are in the majority Senate And House of RepresentativesThey will be able to pass laws more easily. Otherwise, a long-term political stalemate may occur. In any case, there is probably a Harris’ possible victory to think A few changes for Europeespecially compared to the Trump victory.
