The US economy is still the force that sets the pace for the rest of the world, and Credico UK has researched the possible economic consequences of the presidential election between Donald Trump and Hillary Clinton.
The recent debates have certainly heated things up between the two candidates, and at present Trump is struggling to overcome criticism and scepticism among female voters for previous indiscretions which has led to a decline in poll numbers over the last few days. However, the outcome of this race is still a vastly unknown quantity – anything can happen, and Trump has managed to subvert almost every expectation of him every step of the way thus far, and it would be very foolish to write off a Republican win.
What does this mean for the global economy?
Just as there were concerns over the economy after the EU referendum ‘Brexit’ result, many countries are starting to evaluate the implications for the outcome of the U.S. presidential election. Even with the rise of China and the growth of emerging markets, America has one of the strongest economies in the world, and there’s going to be some market trepidation in the run-up to the final election day. History suggests that the markets respond far better to election results whose outcomes retain an element of predictability.
Although the majority of U.S. polls have Clinton leading by some distance at this stage, Trump has shown that anything can happen this year, and Credico UK believes the uncertainty of the outcome has the potential to generate a significant movement in the rate of the Dollar. In turn, this would likely cause a knock-on effect on US businesses and the other UK and worldwide businesses that trade with them on a daily basis.
What would a Clinton win mean?
Hillary Clinton’s presidential campaign has also had to withstand a fair amount of criticism, and Credico UK believes that U-turns and backtracking over her trade policies could be detrimental to the markets, or entirely beneficial – only time will tell. Major fluctuations in the market are only likely to reveal themselves when she shows her poker hand, and a dip in Dollar value is expected irrespectively due to ‘a new pair of hands taking the wheel.’ From the perspective of the global markets, the advantage of Clinton coming president is that any decline of the US Dollar would probably short-lived, as she has the support of current President Barack Obama and is a Democrat. However, Clinton’s proposed tax policies indicate a conscious effort to appeal to working-class citizens, with big earners and large corporations likely to be on the receiving end of a cumulative $1.2 trillion tax increase over the next decade.
And a Trump win?
A victory for Trump would a) reduce migration, b) increase trade barriers, and c) increase the risk of escalating trade wars – all negatively impacting the global economy by undermining the competitiveness and long-term growth of theirs. However, tax reform is a key part of Trump’s strategy as he looks to create a more generous system for larger corporations and big companies. Whether or not he is the world-class businessman he claims to be is up for debate, but the tax policies he could put in place could see an indirect boost to the dollar.
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