Americans will flock to the polls today for a vital election that will see either Donald Trump take office for a second separate term, or see Kamala Harris become the US’ first female President.
Both candidates have mapped out their financial and economic promises, but how will they transpire once either of them take office?
Benjamin Avraham, Founder and CEO of Okoora, breaks down both Trump’s and Harris’ financial policies, analyses what will come to fruition and why regardless of who wins, “it’s crucial for business leaders to remain agile, anticipate potential disruptions, and prepare for the unexpected.”
As the 2024 US presidential race comes down to the wire, the contest remains tight between Donald Trump and Kamala Harris.
For business owners, the outcome could mean substantial economic changes, and the stakes are high. Whether you’re in international trade, finance, or manufacturing, preparing for the potential shifts under a second Trump presidency is critical, especially since his policies could dramatically alter the business landscape.
On the other hand, a Harris win suggests a steadier course, with few surprises compared with the path set by the Biden administration, but still plenty to consider.
The Return of “America First”
Trump’s economic playbook centres on reviving American manufacturing. His first term saw tariffs, subsidies, and tax incentives aimed at boosting domestic production. If he returns to the Oval Office, expect more of the same.
The goal? Reduce reliance on countries like China and bring manufacturing jobs back home. For companies in the manufacturing sector, this could mean rethinking supply chains, prioritising domestic sourcing, and adjusting to potential cost increases from tariffs on imports.
But businesses reliant on global suppliers might find themselves facing higher costs and limited options. The key will be staying nimble and proactive, anticipating these shifts before they hit the bottom line.
Trade Tensions on the Horizon
When it comes to trade, Trump’s protectionist stance has always been clear: reduce trade deficits and renegotiate deals in favour of the US. A second Trump term could see even tougher measures, especially with China.
Increased tariffs or trade restrictions could spark volatility across global markets, impacting businesses that rely on stable international partnerships. On the other hand, a Harris presidency would likely continue the free trade policies of the Biden administration, but with continued pressure on China regarding industries linked to national security.
For companies engaged in international trade, especially with countries like China that will likely be subject to tariffs, preparing for potential disruptions under a Trump presidency will be essential. Diversifying suppliers and markets may be one way to mitigate the risks.
The Dollar: Strong, Weak or Volatile
Trump’s commitment to a strong dollar, however, will face challenges from other aspects of his economic policies. His policies could create conditions that weaken the dollar, affecting profitability for companies involved in global trade. Businesses may need to adopt currency hedging strategies to protect against these fluctuations.
In contrast, Harris is expected to stay the course with the Federal Reserve’s gradual lowering of interest rates, leading to a softer dollar over time. For businesses, this means fewer surprises but still an environment where strategic financial planning is key to managing currency risks.
Inflation, Interest Rates, and Borrowing Costs
Under Trump, a combination of tax cuts, infrastructure spending, and protectionist policies could ignite inflation, forcing the Federal Reserve to raise interest rates. Higher rates mean higher borrowing costs, which could stifle investment.
Harris, on the other hand, is expected to be more cautious about fiscal spending, learning from the inflationary fallout of post-COVID stimulus measures. This could help keep inflation in check and avoid large-scale spending bills unless inflation significantly subsides.
Should Trump be elected, businesses must brace for potential interest rate hikes and manage their debt levels accordingly.
Taxes: More of the Same?
Despite political differences, neither candidate is expected to dramatically alter current tax policies. Harris would likely extend Trump-era tax cuts, but there may be pressure from within the Democratic Party to increase corporate and high-income taxes.
Businesses should expect more of the same in terms of taxation with minor tweaks rather than a major overhaul.
Energy: Lower Costs or Environmental Pushback?
Trump’s support for domestic fossil fuel production – through deregulation and expanded fracking – could result in lower energy costs for businesses. However, this comes with the risk of backlash from global markets and consumers that are increasingly leaning toward sustainability.
Harris has made contradictory promises regarding her energy policy. However, it is expected she will continue the ongoing Biden administration policy, which is allowing increased fossil-fuel energy production in the US in practice, whilst rhetorically claiming to restrict energy production.
Subsidies for renewables will persist, within the limitations of fiscal restraints. Businesses in energy-intensive sectors should stay flexible, keeping an eye on both policy shifts and market sentiment.
Immigration: Business as Usual?
The US economy will continue to rely on an influx of foreign labour – legal and illegal – supporting GDP growth and keeping labour costs down, regardless of who is in office.
Both candidates may pay lip service to American organised labour and the fear of undocumented immigrants on occasion, but neither are expected to make drastic, effective changes to immigration policy in practice. Businesses should expect the continuation of the status quo, whoever is in office.
Harris Stability or Trump Volatility?
A Harris presidency would likely see continued GDP growth accompanied by a growth in the consumption of imported goods and services, which would increase cross-border trade volumes. The dollar might weaken slightly, but volatility in the currency and stock markets would be relatively low compared to a Trump victory.
For businesses, a Trump return would bring more unpredictability, fluctuations in trade, energy, and inflation could lead to significant shifts in strategy. However, it would likely involve policies that provide an impetus for a revival in US manufacturing in the American heartland.
Regardless of who wins, it’s crucial for business leaders to remain agile, anticipate potential disruptions, and prepare for the unexpected.
Staying Ahead of the Curve
The potential for a second Trump term introduces significant uncertainty into the economic landscape. The key for businesses is to remain agile and adaptable, with a clear understanding of how these possible changes could impact their operations.
From adjusting supply chains and pricing strategies to managing currency risk and staying ahead of regulatory shifts, proactive planning will be essential. In a period of heightened volatility, those who prepare well will be better positioned to navigate the challenges and seize the opportunities that may arise.
Whether Trump wins or not, the possibility demands careful consideration and strategic foresight from all business leaders.
