2024 US Election Breakdown: Economy, Trade, and Investments
In this episode of What Your Bank Doesn’t Tell You, recorded on November 5th, we dive deep into the impact of the 2024 US Election on the economy, trade policies, and key sectors, with insights from Thorsten Hens, Professor of Financial Economics at the University of Zurich.
Disclaimer: The insights shared reflect the context as of November 5th, 2024. The 2024 US Election is not just about two candidates but about two radically different economic paths. With topics ranging from tariffs to trade wars, immigration policies, abortion and climate initiatives, both candidates’ stances could significantly shift the US’s role on the global stage and impact investments.
Key Differences in Economic Policy
Tariffs and Trade Wars:
If re-elected, Trump is likely to push for increased tariffs on imports, especially from countries like China and Germany. His “America First” approach aims to boost domestic production, but it risks creating a Prisoner’s Dilemma in global trade, where retaliatory tariffs from other nations could harm US industries. In contrast, Kamala Harris’s policies suggest a more moderate stance, possibly avoiding tariff wars and promoting diplomacy in economic relations.
US Foreign Relations and Security:
A Trump-led administration would likely demand more from NATO allies on security burden-sharing, as seen in past discussions with Europe over defense funding. On the other hand, Harris could encourage a more cooperative, less transactional approach, which could stabilize US-European relations.
Sectoral Impacts
Energy and Environment:
Trump’s policies may lead to increased oil production, benefiting traditional energy sectors but potentially hindering green energy initiatives. Harris, with her commitment to renewable energy, may prioritize investment in green technologies, aligning with global climate goals and creating opportunities in the renewable sector.
Technology Sector:
The tech industry sees potential risks and rewards under each candidate. Trump, generally supportive of big tech and private innovation, may allow for more industry growth. Harris’s Democratic platform, however, has hinted at possible antitrust regulations, which could challenge monopolistic tech giants.
Financial and Health Sectors:
The financial sector may benefit from a Trump victory, with relaxed regulations favoring large banks and easing mergers and acquisitions in regional banks. In healthcare, Harris would likely expand on Biden’s Affordable Care Act, potentially supporting companies tied to Medicare and affordable health services.
Inflation, Monetary Policy, and Investment Sentiments
Monetary Policy and the Federal Reserve:
Trump has often criticized the Fed’s independence, which could lead to changes in leadership and influence over monetary policy. Harris, however, is expected to uphold the Fed’s autonomy. Both candidates are likely to increase spending, but the extent of influence on the Fed could impact inflation rates and the strength of the US dollar.
Long-Term Investment and Safe Assets:
With economic uncertainties looming, gold has emerged as a secure asset. As Professor Hens notes, “In times of crisis, it’s always good to have some gold.” Investors might find this advice particularly relevant in the current climate of inflation fears and sectoral volatility.
Conclusion:
The 2024 US Election presents starkly different paths for the US economy and global economic dynamics. Investors, policymakers, and industries alike need to consider the potential impacts as they prepare for shifts in tariffs, trade policies, and sectoral growth under each candidate’s administration.
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