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Historically, money matters have been a decisive issue in American elections. Donald Trump’s narcissism, his tendency towards autocracy and his overt racism have worked against him.
In terms of personality, Democratic candidate Kamala Harris outshone Trump in what may prove to be the only televised debate before November 5.
He demonstrated a real ability to deflect Trump’s most bizarre statements and irritate the former president.
Models show deficits and debt will rise under Trump, taking advantage of the extreme privilege of the dollar remaining the world’s reserve currency. Harris, following Bill Clinton’s lead, is more conservative on fiscal matters.
But Trump, with his supply-side tax cut agenda and mercantilist views on trade, may have an economic advantage over Harris.
The fiscal cost of their policies seems staggering, but unlike in Britain, where voters are more willing to accept higher taxes to pay for better public services, workers in the United States prefer to keep their wages.
They are also less resentful of wealth and less admiring of success, thinking that one day they too could be rich.
Whoever inherits the White House next year will do so in the knowledge that the Federal Reserve, the US central bank, has done its job. The latest consumer price figures show that headline inflation is not far from the 2.5% target.
Core inflation picked up largely due to higher housing costs. That shouldn’t stop the Fed from cutting interest rates by at least a quarter point this month amid concerns that output momentum is fading.
Trump is obsessed with growth and, unlike the Labour Party in Britain, wants nothing to stand in his way. He is committed to ridding any future administration of Federal Reserve Chairman Jay Powell, whom he appointed, when his term expires in 2026. He threatens to limit the Fed’s power by undermining its independence.
Lower income and corporate taxes are at the heart of his policy. He has promised to renew his 2017 tax cuts for entrepreneurial Americans, which saw the top income tax rate drop from nearly 40% to 37%.
Once in office, Trump cut corporate taxes from 35% to 21% and is now aiming for 15%.
Instead, Harris would shield households earning $400,000 (£307,000) a year – a high figure by UK standards – from tax increases, but allow Trump’s tax breaks for the wealthy to expire.
A tax would be imposed on the super-rich, i.e. households with a net worth of $100m (£76.7m), a very high bar. Corporate taxes could be in the crosshairs.
Free trade and globalization would take a serious hit if Trump were elected.
It would widen the tariff net on China, imposing a 60% tax on all goods, but it also talks of a 10% to 20% tariff on the rest of the world, which does not bode well for a free trade agreement with the United Kingdom.
It would also constitute a hidden tax on consumers and businesses if price increases were passed on rather than absorbed.
There is a clear difference between the tax cuts Republicans are offering and Harris’s willingness to allow taxes to rise to pay for public services and the support of environmental activists.
Models show deficits and debt will rise under Trump, taking advantage of the extreme privilege of the dollar remaining the world’s reserve currency. Harris, following Bill Clinton’s lead, is more fiscally conservative. The loss of commitment to free trade by both candidates is worrying.
No one is talking about Smoot-Hawley-style tariffs, the kind that helped trigger the Great Depression of the 1930s.
However, there are retaliatory trade barriers, such as those being used against Chinese exports of cheap electric cars.
If it were applied more universally, it could make our lives a misery.
Scottish fog
It is well known that Scotch whisky is one of Britain’s biggest exports.
It is therefore worrying that the value of exported Scotch whisky has plummeted by 18% to £2.1bn in the first half of this year.
Overseas whisky was sold at 36 bottles per second, compared with 40 in the first half of last year. The situation is not helped by the 2019-21 trade dispute with the United States, the largest market, which caused the market share of single malts to plummet.
It never fully recovered. Keir Starmer’s election promise included “supporting whisky producers with all his might”. The industry is pushing for the 10.1% tariff increase imposed in August 2023 to be scrapped.
After the winter fuel subsidy fiasco, don’t hold your breath.
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