(Finance) – Obtaining a precise picture of the impact of the US presidential elections on the markets is complex, not only because the polls continue to indicate an extremely close race. It is necessary to consider two factors: theFirst of all, the plans remain very vague and are unlikely to become more detailed in the coming weeks.. Secondly, and most importantly, Strong fiscal measures require the President to have the support of both houses of Congressa possibility that appears possible, but extremely uncertain.
On the Democratic front, candidate Harris has outlined a program characterized by an increase in corporate taxes, from 21% to 28%stricter antitrust oversight to curb “excessive” profits in the food sector, measures to increase housing supply, and tax breaks for first-time buyers and families with young children. The aim is support the purchasing power of the middle class and solve the housing crisisthe two most urgent needs expressed by the voters. As regards trade, It is expected to maintain the protectionist stance toward China adopted by the Biden administration, which remains popular among voters. The same applies to measures aimed at promoting domestic manufacturing development and ecological transition.
Former President Trump predicts a series of across-the-board tax cutsespecially for businesses, and a drastic reduction in immigration. Its economic experts plan to significantly increase tariffs on China and, to a lesser extent, on the EU and major trading partners, while arguing that such measures also serve as leverage to obtain more favorable conditions for US exports. Economists fear that most of these measures could cause inflationespecially those related to immigration. It is worth remembering that the post-COVID surge in immigration has helped contain wage pressures in the face of strong labor demand. In the past, Trump and some other Republicans have threatened to reduce the Fed’s independence by appointing more loyal members to the FOMC, but that would require full support from the Senate.
That said, the most important point to consider is the restrictions that the new president will face in implementing his economic platform. While tariffs can, in principle, be imposed by presidential decree, fiscal policy actions require a majority in both the House of Representatives and the Senate (where, in some cases, a 60% majority is necessary). Looking at the past and current (very uncertain) polls, The most likely outcome is that the President will find himself having to work with a Congress without a clear majority. This would severely limit the scope for radical political action.
What is certain is that Neither party seems concerned for the projected increase in public debt. On the contrary, both programs would likely lead to a higher deficit. At the same time, the extreme level of political polarization makes a bipartisan agreement to bring the debt back to a sustainable level unlikely.