
The risk of the weaponisation of finance through punitive trade tariffs could lead to a fragmented trading world starting to emerge, with a two-track versus a single-track economy globally.

Many are saying that Trump is escalating to de-escalate with China, but even tariffs of the order of 10 to 20 percent elsewhere will lead to a tit-for-tat style policy in the world.
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Investec CEOs, Cumesh Moodliar (SA) and Ruth Leas (UK), share their key insights from the recent IMF and World Bank meetings in Washington, including what could happen in the global economy if Trump wins.

The rand in general could be expected to be weaker under a Trump Presidency. SA has come under fire before from US tariffs when Trump was in the Whitehouse.

The outcome looks really too close to call, as does the control of the House. We still suspect that the “Grand Old Party" [the Republicans] will regain control of the Senate, albeit perhaps narrowly.

The US budget deficit is likely to be large (>6% of GDP) regardless of which candidate wins. A Harris presidency will likely come with higher taxes, while a Trump presidency will likely mean higher tariffs.
The return of inflation?

A Treasury Economist's view
"South Africa's economic landscape is influenced by US interest rates (which affect foreign capital flows), and Chinese economic growth and commodity prices. A potential Trump victory, alongside a Republican sweep, could result in increased tariffs in early 2025 and tax cuts in 2026. Inflation could be revived, compelling the Fed to keep rates higher. A victory for Harris may primarily influence domestic US policy, with a platform focused on utilising tax increases to fund social spending initiatives, but a higher risk-free rate, with spillover effects to the rest of the world." - Tertia Jacobs, Investec Treasury Economist

A Trump victory will accelerate global fragmentation. This theme, coupled with another round of substantial China tariff increases to offset domestic largess/tax cuts, must be inflationary.

Should Trump introduce a tariff on all US imports, all US trading partners may raise barriers on US imports. In such a scenario, China may be a net beneficiary as Chinese producers may improve their competitiveness in third countries vis-à-vis US producers.

Harris has been keen to correct an impression that she was opposed to fracking and, while Trump is generally seen as being more positively disposed to oil than Harris, both appear keen to support the domestic oil industry.
A Trump win would drive up inflation

A Treasury Structuring expert's view
“While a Trump re-election is likely positive for risk assets, the US dollar and economic growth, it will add inflationary pressures due to higher debt, market fragmentation, and a re-escalation in the US-China Trade War." - Neo Ralefeta, Treasury Structuring Consultant, Investec
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