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CONTRIBUTORS

Paul Mielczarski

Head of Global Macro Strategy,
Brandywine Global

Global elections in 2024 are turning out to have more plot twists than a summer blockbuster. And while we are not seeking to be political pundits or enter the forecasting fray, as investors we must analyze potential election outcome implications and gauge the possible impact on policy, the economy, and financial markets.

The US presidential election, in particular, has the potential to introduce vast changes on several policy fronts. While markets appear to be focusing largely on fiscal policy and taxes, the proposed new trade policies are massive in their scope. If implemented, Donald Trump's campaign proposals on trade, which include a 60% tariff on imports from China and a 10% tariff on imports from other countries, could send US tariffs to their highest levels since the 1930s. The magnitude of these proposals could certainly change, and it is impossible to know how or when any new trade policies would be implemented. However, even if only half of these tariffs are introduced, 70 years of US trade liberalization could be reversed. It is extremely difficult to forecast the impact of such a large policy shift on financial markets, inflation, domestic and global growth, or geopolitics. Hence, it is unlikely that markets are fully pricing in the impact of these proposals.

Exhibit 1: US Import Duties Collected as Percentage of Total Imports

Percent. As of December 31, 2023

Sources: Brandywine Global, Haver Analytics, International Trade Commission.

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