'Trump pleases the stock market in the short term, but creates more risk in the medium term'
3' min read
3' min read
"The general perception is that in the short term Trump is good for economic growth and the stock market. But in the medium term he would bring more inflation, higher tariffs and more geopolitical uncertainty." James Knightley, Chief International Economist at Ing, looks at the US election in the face of numerous charts he has drawn up. Trump would please the stock market in the short term, but in the medium term the trade war he champions and his restrictive immigration policy would weigh heavily. Kamala Harris, on the other hand, would be more in the groove of continuity with President Biden.
The trade war with China is one of the biggest global uncertainties should Trump win. But Biden, Haris, have also raised tariffs on China.
True, Biden and Harris did it too, but Harris' idea is to confront China by introducing tax incentives to stimulate domestic production. With Trump, the escalation would be much greater: his policy is precisely based on introducing tariffs on imports from China of up to 60%. In the event of his victory, this would have an inflationary impact and delay rate cuts by the Fed. This would further strengthen the dollar and weigh on US exports.
If Trump won, would there also be an immigration issue?
Yes. Trump's anti-migration policy will reduce the labour force in the US over time. This will have a potentially inflationary but also negative effect on the US economy.
