How Tax and Tariff Policies Impact Equity Markets in 2024 U.S. Presidential Election - Trump vs Harris
As the 2024 U.S. presidential election approaches, the proposed policies from leading candidates, Donald Trump and Kamala Harris, are under scrutiny for their potential impacts on equity markets. Trump's emphasis on tariffs as a revenue-generating tool to offset tax cuts may not be sufficient, according to analysts at Citi Research. On the other hand, Harris's focus on higher corporate taxes could pose risks to U.S. equity fundamentals.
If corporate tax rates were to rise from 21% to 35% under Harris's platform, it could significantly impact corporate earnings and reduce free cash flow for investments and shareholder returns. This could lead to a decrease in expected earnings per share growth for companies. Additionally, the relationship between higher tariff rates and lower import volumes may introduce uncertainty into the market as global supply chains adjust.
It is essential for investors to consider the potential implications of these policies on equity markets, especially in terms of how they could affect corporate earnings and investment strategies. A unified Congress could facilitate the enactment of more comprehensive tax and tariff policies, while a split Congress could lead to gridlock and hinder significant policy changes.
In conclusion, investors should keep a close watch on how tax and tariff policies evolve as they could have a significant impact on equity markets and corporate earnings in the coming years. Understanding the potential risks and opportunities associated with these policies is crucial for making informed investment decisions.