Looking Back on Trump vs. Harris: The Effect of the 2024 U.S. Election on the Financial Markets

With Donald Trump’s victory in the 2024 U.S. presidential election, the nation has embarked on a markedly different economic trajectory than it would have under Vice President Kamala Harris. Now that his administration is taking shape, it is clear that his policies on taxation, trade, and labor markets are already beginning to influence financial markets, corporate strategies, and overall economic sentiment.

Had Harris won, her economic approach would have likely extended and expanded upon President Biden’s policies, emphasizing progressive taxation, government spending, and labor protections (RBC Brewin Dolphin 2024). She was expected to push for higher taxes on corporations and the wealthy to redistribute wealth and bolster social programs. While this could have benefited the middle class and strengthened labor rights, it also might have increased business costs, particularly in labor-intensive sectors like retail, manufacturing, and services.

Instead, with Trump in office, corporate tax cuts remain a priority. His administration has already signaled its intent to extend or enhance the Tax Cuts and Jobs Act (TCJA), which was set to expire in 2025. This move has reassured investors, driving market confidence and short-term gains. However, Morgan Stanley strategists warn that extending the TCJA could add $1.6 trillion to the federal deficit over the next decade, potentially contributing to rising Treasury yields and increased borrowing costs for corporations (Morgan Stanley 2024).

Another area where Harris’s policies would have sharply diverged is immigration. While she advocated for expanding legal pathways and stabilizing the labor force through pro-immigration measures, Trump’s administration has instead begun executing his promise of mass deportations and strict border controls (Al Jazeera 2024). As a result, labor shortages have started to emerge in key industries, driving up wages but also increasing inflationary pressures—an outcome that some economists had predicted. Had Harris won, the labor force may have remained more stable, potentially mitigating wage-driven inflation.

Trade policy has also taken a dramatic turn. As of March 4th, Trump has placed tariffs of 25% on goods imported from Canada and Mexico, along with an additional 20% tariff on Chinese imports. This has already sparked major concerns about rising consumer prices and potential supply chain disruptions, immediately causing a near 2% drop in the S&P 500 index, the largest in 2025. Under a Harris administration, trade policies were expected to be more diplomatic, avoiding broad-based protectionism in favor of strategic alliances and economic partnerships.

Looking back, the financial markets have responded as expected: sectors benefiting from tax cuts and deregulation, such as finance, have surged, while industries reliant on immigrant labor and international trade, such as agriculture and retail, are facing headwinds. While Trump’s policies may drive short-term growth and investor optimism, long-term risks such as inflation, trade instability, and rising deficits remain key concerns.

Ultimately, the 2024 election has set the U.S. on a decisive economic course. While Harris’s policies might have prioritized labor rights, progressive taxation, and immigration-driven workforce expansion, Trump’s administration is steering toward corporate tax relief, aggressive trade measures, and restrictive immigration policies. The full impact of these choices will unfold in the coming years, shaping the nation’s economic landscape for the foreseeable future.

Sources

Morgan Stanley, 2024. "3 Ways the U.S. Election Could Affect Investors." Accessed at https://www.morganstanley.com/ideas/us-election-2024-stock-market-implications.

RBC Brewin Dolphin, 2024. "How could the U.S. elections impact financial markets?" Accessed at https://www.brewin.co.uk/insights/how-could-the-u-s-elections-impact-financial-markets.

Al Jazeera, 2024. "US election: 10 days left – What polls say, what Harris and Trump are up to." Accessed at https://www.aljazeera.com/news/2024/10/26/us-election-10-days-left-what-polls-say-what-harris-and-trump-are-up.

Al Jazeera, 2024. "The 'spectre of being overrun.'" Accessed at https://www.aljazeera.com/news/longform/2024/10/25/us-presidential-candidates-join-global-shift-rightward-on-immigration.

Image Source: Saul Loeb