It makes no difference to financial markets who wins the US presidential election, according to Larry Fink, chief executive and co-founder of BlackRock, the largest money management firm in the world. “I’m tired of hearing this is the biggest election in your lifetime,” Fink said. “The reality is over time it doesn’t matter.” I beg to differ. Even on Fink’s own turf — growth and return on investment — the difference between the two outcomes is large. November 5 is not a Coke versus Pepsi choice, as we might characterise the race between Bill Clinton and Bob Dole in 1996, or even Barack Obama versus Mitt Romney in 2012. Each of those elections offered moderately diverging visions of the status quo. The gap in possible futures between Kamala Harris or Donald Trump winning is a sharp fork in the road. Swampians will be unsurprised to hear that I see 2024 as more of a choice between kale juice cleanse and methylated spirits. That is not because I view Harris as a transformative prospect who would inject vitamins into America’s lifeblood. It is simply because Harris is not Trump. By default she is better for our health.
What Fink must know is that Trump has radically market-relevant plans in his sights. Robert Lighthizer, his senior trade guru, has made it plain that Trump would embark on his tariff war in the first 100 days and does not require congressional approval. The effect of a 20 per cent duty on all imports and 60 per cent levies on China’s would be, um, non-trivial. IMF geeks will know better, but I don’t recall a time when the Fund offered two sets of forecasts for world growth depending on who won the US presidential election, as it did this week. On the Fund’s “baseline” scenario, the world economy would grow by 3.2 per cent next year and the US would grow by 2.8 per cent. On their Trump tariff war scenario, global growth would fall by a quarter in 2025 and by almost double that in 2026. The US would lose a full percentage point of its 2025 growth.
But that’s a conservative forecast. The IMF forecasts presume that America’s trading partners would slap a modest 10 per cent retaliatory tariff on US imports in response to Trump’s declaration of commercial war. But history, and common sense, tells us that once you get into a retributive trade war, the tit-for-tat only gets worse — beggar-thy-neighbour. So the IMF’s forecasts are relatively optimistic. Moreover, they do not factor in Trump’s oft-repeated vow to fire Jay Powell, the chair of the US Federal Reserve. All of which makes me wonder what Fink can be Finking (sorry, thinking). If trade wars, deglobalisation, and renewed inflation are not market moving, what is?
And I still haven’t mentioned Adolf Hitler. I like to think I’m not one of those types who goes round with their pants on fire. But when those who know Trump best, and have worked with him the closest, tell you that Trump wants to be a strongman and has consistently, over decades, admired Hitler, I think it’s worth paying attention. As the late great American novelist Maya Angelou once said, “When someone shows you who they are, believe them the first time.”
As set out in this Atlantic piece by Jeffrey Goldberg, Trump often expressed admiration for Hitler and said: “I want the generals that Hitler had”. His first wife, Ivana Trump, said he kept a book of Hitler’s speeches by his bedside. Over and over, Trump has expressed envy for strongmen like Vladimir Putin, Xi Jinping and Kim Jong Un. As president, he kept being blocked from doing the kinds of things strongmen do — shooting protesters, for example, and locking up his political opponents. Trump 2.0 would not have restraining types like the retired general John Kelly as his chief of staff, or now retired general Mark Milley as his chairman of the joint chiefs of staff. He would have enablers. On this count too, I believe Fink should reconsider his insouciance. The rule of law is also non-trivial.
Lauren, you’ve been on the trail for months. I have two questions for you. Do Trump voters simply think he’s just exaggerating to troll the liberals, or do they believe he is who he says he is and want that Trump anyway? How seriously do you take Trump’s professed plans?
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Recommended reading
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My column this week is on the billionaires who once condemned Trump but are now back in his orbit, “What Croesus wants from Trump”. “What, then, is driving the rich back to Trump?” I ask. “The missing piece is psychology. When you are as rich as Croesus, paranoia about losing it all takes hold. Your sense of reality changes.”
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Do read this Jonathan Martin piece in Politico on how Harris is focusing too much on “preaching to the converted”. I share Martin’s point that her campaign has been surprisingly unimaginative. Also read the Washington Post’s always obligatory David Ignatius on Russia’s dirty tricks across the west: “What’s a little covert war among friends?”
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On the subject of global trade wars, The Bulwark’s Eric Rauchway is worth reading on Trump’s obsession with the “McKinley tariff” (after former president, William McKinley). “Trump loves the 1890s but he’s clueless about them.” The 1890s was the great depression before the Great Depression, in part triggered by the “McKinley tariff”.
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My colleague James Politi has a great rundown of Kamala Harris’s potential economic team. I’m struck by how little we know of Harris’s own economic views. She’s an unknown quantity.
Lauren Fedor responds
On your first question, it is important to remember there is a wide range of Trump voters, from the diehard Maga base you see at his rallies, to the life-long Republicans who are begrudgingly sticking with him, to the disaffected working class who are fed up with the cost of living and think he will make them better off — not to mention the Wall Street bigwigs drawn to his promises of lower taxes and less regulation. Many of the base voters take the former president literally, and do not seem the least bit concerned about what the consequences might be of, for example, unleashing the US military to attack the “enemy within”. Others shrug off Trump’s more aggressive rhetoric as hyperbole, and are keen to point out American democracy survived his last administration.
That said, the Harris campaign clearly thinks there is a significant, or at least decisive, sliver of the electorate who can be won over on this issue. I find it interesting that the vice-president has spent so much time in the final stretch of her campaign with former Republican congresswoman Liz Cheney. They have barnstormed suburban areas across the swing states in recent days with a clear message for moderates, and moderate women in particular: Trump poses a serious threat to our democracy. And Harris is going to make the case in even starker terms next week, when she delivers what her campaign is billing a “closing argument” on the Ellipse, outside the White House, in a foil to Trump’s own now infamous speech there on January 6 2021.
It remains to be seen whether the sober pitch will resonate with enough voters to get Harris over the line — and what Trump might do, win or lose. Given how the former president reacted to his loss last time around, anything seems possible.
Your feedback
And now a word from our Swampians . . .
In response to: “Three lessons from the US port crisis”:
“Surely the Biden administration is not anti-business by supporting healthy capitalist practices which oppose monopolies and promote competition in the marketplace. Similarly, ensuring a modicum of worker sharing in soaring profits in the global shipping industry reinforces the importance of stakeholder capitalism as advocated by the Business Roundtable.” — Ted Smyth
“Our best public officials can, do and should give industry actions a ‘hard look’ based on facts and evidence. Our problems with Big Tech exist in part because the players divvy up the value privately, and then come to government for assistance without the government or taxpayers receiving any value. Think the internet, our yawning cyber vulnerabilities and potential electricity production disruptions attributable [to] AI. Sure, they may pay taxes one day, but the reality is today’s financial markets and players have many ways to escape paying up for costs imposed on society.
For peculiar reasons, economists don’t dare consider the possibilities. Why not? The returns on consulting or being a department chair far outweigh any perceived public good associated with a Sisyphean effort that upsets the status quo.” — Len Kennedy
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