How the 2024 US election could reshape global markets and trade

The 2024 US presidential election between Donald Trump and Kamala Harris is likely to influence financial markets, the energy sector, the US dollar, and global trade relationships. Each candidate’s approach may reshape these critical areas in unique ways, leaving a mark on economies worldwide.

Financial markets: Boosting traditional or progressive sectors

Election outcomes in the US typically send shockwaves through financial markets, with the policies of the winning candidate expected to impact different industries.

• Trump’s market impact: If Trump wins, traditional sectors such as oil, defense and banking could gain, thanks to anticipated deregulation and potential corporate tax cuts. These moves could spur short-term rallies in US stock markets, positively impacting global companies in these industries. However, Trump’s protectionist stance, including tariffs, might add volatility to emerging markets that depend on US trade and open supply chains, potentially impacting global investment flows.
• Harris’s approach to markets: A Harris victory could favor progressive sectors like renewable energy, healthcare and clean technology. Her focus on environmental regulation and healthcare may foster growth in these areas, while traditional energy and finance could face increased uncertainty. Harris’s cooperative approach to international relations may also reduce geopolitical risks, making global supply chains more predictable and benefiting multinational companies looking for stability.

While election results tend to cause market fluctuations, history shows that broader economic factors drive long-term trends, emphasizing the importance of macroeconomic indicators over election outcomes.

Energy sector: Traditional fossil fuels versus renewables

Energy policy represents one of the sharpest contrasts between Trump and Harris, with distinct implications for both traditional and renewable sectors.

• Trump’s energy policies: A Trump administration would likely maintain strong support for fossil fuels, favoring oil and gas through deregulation. Environmental restrictions could be rolled back, allowing traditional energy sectors to expand production and profitability. Meanwhile, renewable energy may see less government backing, which could slow growth in this sector.
• Harris’s green energy focus: Harris’s policies, on the other hand, would emphasize renewable energy, particularly investments in electric vehicles and clean technology. Stricter environmental standards may challenge the oil and gas industry, but renewable energy companies would likely see substantial federal support, fueling growth in solar, wind, and electric vehicle infrastructure. Her clean energy approach aligns with global sustainability goals, attracting investors focused on long-term environmental returns.

The election will likely influence energy policy direction, with Trump favoring fossil fuels and Harris prioritizing green energy.

Currency markets: Stability versus strength for the dollar

The value of the US dollar is a critical factor in international trade and finance, making the election outcome significant for global markets.

• Trump’s dollar policies: Trump’s possible expansionary fiscal policies could strengthen the dollar, benefiting US imports but adding pressure to emerging market currencies that rely on dollar stability. His protectionist measures may drive short-term appreciation of the dollar but could create volatility if trade restrictions strain global financial flows.
• Harris’s currency strategy: Harris would likely promote a more stable fiscal environment, which could bring predictability to currency markets. Her emphasis on international cooperation and steady trade relations may curb currency volatility, appealing to multinational investors. Her moderate fiscal approach may result in a less rapid dollar appreciation, offering a steady environment for global trade.

In this way, Trump’s approach could lead to dollar strength and volatility, while Harris’s may foster a more stable currency outlook.

US-China trade relations: Confrontation or cooperation?

The candidates’ approaches to trade relations with China present a clear policy divergence, with implications for global economic stability.

• Trump’s protectionist stance: Trump’s confrontational policies with China may lead to increased tariffs, higher import costs, and disruptions to global supply chains. A second Trump term could bring a more severe approach, including revoking China’s Most Favored Nation status. These moves would likely create volatility in emerging markets and disrupt global trade flows, impacting businesses reliant on Chinese imports.
• Harris’s cooperative approach: Harris is expected to favor a cooperative yet firm stance with China, focusing on intellectual property rights and fair-trade practices without escalating tariffs. Her approach would likely stabilize US-China trade, encouraging dialogue and potentially improving trade conditions for multinational firms with extensive supply chains.

In sum, a Trump presidency may increase trade tensions with China, while Harris’s policies may benefit companies and markets seeking stable, open trade.

Global trade: Bilateralism versus multilateralism

Each candidate’s vision for trade policies carries implications for the global economic landscape, impacting both emerging and developed markets.

• Harris’s multilateral focus: Harris would likely continue the Biden administration’s multilateral trade policy, strengthening alliances and promoting sustainability and labor rights. Her approach would reduce trade tensions and encourage international cooperation, benefiting emerging markets seeking growth opportunities and stability. Investments in clean energy and infrastructure could also open new economic avenues for global trade partners aligned with these values.
• Trump’s protectionist approach: Trump’s policies favor a protectionist, bilateral approach to trade. Tariffs could become negotiation tools, raising import costs for US consumers but potentially benefiting certain domestic industries. By prioritizing bilateral agreements, Trump’s policies might shift supply chains away from China, creating winners and losers among emerging markets. Emerging economies reliant on US trade may face inflationary pressures and currency shifts as their central banks respond to potential trade-driven volatility.

While Harris’s approach could promote global cooperation, Trump’s policies may introduce both risks and opportunities for markets depending on their exposure to US trade.

Precious metals: The outlook for gold and silver

Election outcomes also tend to influence gold and silver prices, although long-term trends often depend more on economic forces and global demand for safe-haven assets.

• Gold’s safe-haven appeal: Gold has historically performed well under both Republican and Democratic administrations due to its role as a hedge against economic uncertainty. Geopolitical tensions during election cycles often drive investors to gold, while inflationary pressures from both candidates’ policies may also fuel demand. The dollar’s strength, which could fluctuate with policy shifts, also impacts gold’s appeal, with a weaker dollar typically boosting gold prices.
• Inflationary pressures: Both candidates’ policies could create inflation, encouraging demand for gold as a hedge against rising costs. While Trump’s policies might lead to dollar strength that could curb demand, Harris’s focus on stability may support a steadier demand for precious metals.

Overall, the long-term performance of gold and silver will depend on global economic stability, inflationary trends, and the dollar’s value.

Conclusion: A crucial choice for the global economy

The 2024 US presidential election will have broad-reaching consequences for global markets, currency strength, energy policy, and trade relations. A Trump administration could benefit traditional industries, drive dollar strength, and emphasize protectionist trade, while Harris’s policies might favor renewable energy, stable trade, and a steadier currency market.

Global markets are likely to experience shifts following the election, but investors should focus on long-term fundamentals and broader economic trends. By preparing for both short-term adjustments and enduring economic shifts, global stakeholders can navigate this election’s impacts and position themselves for sustainable growth amid policy changes in the world’s largest economy.

Amro Zakaria is a financial services industry strategist with over 23 years of experience in global markets. He sits on the advisory board and lectures at several universities as a guest speaker on topics related to the global economy, geopolitics, and future economic trends.

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