The economic strategies of Kamala Harris and Donald Trump are in the spotlight as the presidential election nears.
What Happened: Trump’s aggressive tariff proposals and Harris’ commitment to tackle corporate “price gouging” are stirring debate among economists and Wall Street magnates.
According to a report by Fortune, Trump is facing criticism for his proposed “universal baseline tariff” on most imports and a 60% tariff on all Chinese imports.
Despite warnings that these measures could trigger a trade war with China, exacerbate inflation, or even cause a U.S. recession, Trump remains steadfast in his plan.
At a rally this week in North Carolina, Trump declared, "We are going to have 10% to 20% tariffs on foreign countries that have been ripping us off for years."
Also Read: Kamala Harris And Donald Trump Clash Over Federal Reserve’s Autonomy
Joachim Klement, an investment strategist with Panmure Liberum, has calculated that the implementation of tariffs proposed by Trump could cause a 1.2 percentage point surge in inflation during the first year.
He said, "Basically assume that next year inflation in the U.S. is, say, 2.5% on average, with the trade war it would go up to 3.7%."
Klement told the outlet that he doesn't expect a trade war to push the U.S. into recession next year. However, the impact on the U.S. economy will depend on the trade war's severity, and the Federal Reserve's response to the rising inflation that follows.
"Obviously the problem is, if you push inflation close to probably — for individual months — maybe even higher than 4%, that means the Fed has to react. It means the Fed might have to start hiking interest rates again. That's when you get into trouble," he added.
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Meanwhile, Harris has faced criticism for her pledge to combat corporate “price gouging,” with skeptics noting that price controls have historically been ineffective.
Both candidates are being urged to use tariffs to protect emerging or defense-critical sectors of the economy, such as semiconductors or electric-vehicle batteries. However, experts caution that broad tariffs can provoke retaliation from affected nations, potentially leading to a trade war.
Why It Matters: The economic policies of the presidential candidates are crucial as they can significantly impact the U.S. economy and its relations with other nations. Trump’s proposed tariffs, while aiming to protect domestic industries, could lead to inflation and a potential trade war.
On the other hand, Harris’ approach to combat “price gouging” is seen as ineffective by critics. These debates highlight the need for a balanced approach in economic policy-making that protects domestic interests while maintaining healthy international relations.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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