Biden vs. Trump: market impacts of election previewed

Biden vs. Trump: market impacts of election previewed
The upcoming elections are crucial as it may have critical effects on the global economy and the country’s foreign policy
JUN 21, 2024

The new Amundi Investment Institute report shows that the upcoming US national polls as critical since key socioeconomic issues and geopolitical policies of whoever wins the presidency will affect the lives of ordinary Americans and the country’s relationship with its allies abroad.

Protectionism takes center stage

When it comes to economic policies, the report noted, that both presidential contenders may most likely adopt protectionist policies, according to the Economy & Market report jointly written by Mahmood Pradhan (head of macro), Anna Rosenberg (head of geopolitics), and Paresh Upadhyaya (head of fixed income and currency strategy) for the institute

However, neither Biden nor Trump seemed to express eagerness to address the current issue of deteriorating US fiscal position, stated the report. 

Trump is expected to announce, in the coming days, his “dramatic policy shifts,” which will include substantially higher tariffs, the increased deportation of undocumented immigrants, and attempts to dilute the Inflation Reduction Act (IRA), stated the report.

While the protectionist stance may bring some long-term yield, Amundi cautioned that as it escalates, specifically higher tariffs, there is a possibility that this may provoke retaliation.

Meanwhile, foreign trade relations are more likely to be affected by these protectionist policies but it would be different for whoever wins the seat.

“During Trump’s first term, the US adopted an activist protectionist policy, exiting the Trans-Pacific Partnership (TPP) and transforming the North American Free Trade Agreement (NAFTA) into the United States-Mexico-Canada Agreement (USMCA); Trump targeted China and allies alike with these measures. However, during Biden’s first term, the US maintained Trump's tariffs on China and expanded selective protectionism with additional measures that prevent China from accessing high technology from the West. Both candidates will likely continue with protectionist policies to varying degrees,” it said.

“Biden’s re-election would likely maintain the status quo with a targeted expansion of protectionist industrial policies. We anticipate no major changes to the existing tariff system and Biden might renegotiate the USMCA to include protections on labour and environmental issues. With no material change in direction (with the exception of more protectionism against China) we would not expect any significant economic impacts,” it added.

Geopolitics and foreign relations remain a burning issue for Biden but somehow “cold” with Trump

In the meantime, Biden is most likely to maintain his interventionist stance, especially with the issue of Ukraine and the escalating conflict in the South China Sea, according to the report.

If Biden wins the elections in November, it is expected that his government’s support for Israel will “persist,” although the stance of Israel’s government could make this increasingly difficult.

“There are many downside risks that another Biden administration could face. Despite intense diplomatic efforts to keep the crisis geographically contained, an escalation between Israel and Lebanon, as well as between Israel and Iran, remains likely and both could end up drawing in the US directly,” it noted.

While the US will maintain its support to Ukraine, there is a possibility for lesser monetary support for its cause as there is pressure on the part of Europe to take on more of the responsibility in supporting Ukraine and to use the windfall profit brought by Russia’s frozen assets.

On the other hand, the Amundi report noted that under Trump’s administration, geopolitical risks “are likely to increase as trade restrictions for both allies and adversaries will intensify the scale and scope of economic sanctions and export controls, heightening the economic frictions already playing out, and escalating protectionism and retaliation.”

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.