Donald Trump’s victory is seen as positive for equities, and very negative for bonds; Trump’s win is also seen as making the dollar stronger.

On macros, both Trump’s and Kamala Harris’s policies may lead to the widening of the US fiscal deficit but Trump will widen the deficit more. Trump’s policies are seen pushing inflation higher, Harris’s win could mean lower inflation.

Hence growth may be lower under Trump, better under Harris. Trump’s victory will mean higher interest rates and a stronger dollar; the opposite under Harris.

The nonprofit think tank Committee for a Responsible Federal Budget or CRFB sees Harris’s policies increasing the US deficit by $3.95 trillion by 2035 but Trump will be worse; he may increase the deficit by $7.75 trillion by 2035.

The CFRB says the following programs of Harris will increase expenses: Extension of tax cuts for families earning less than $400,000; expanding the child tax credit to help families with children, expanding the Affordable Care Act means higher insurance subsidies, – supporting affordable housing and increasing the minimum wage.

Now Harris will also raise revenues, by upping the corporate tax rate from 21% to 28%, increasing capital gains tax, upping medicare tax, reforming international tax rules and lowering the cost of prescription drugs. Trump will increase the deficit by again cutting taxes for corporates, under the Tax Cuts Jobs Act (TCJA), exempting tips and overtime from taxes, he will end taxation of social security benefits, and spending less by reducing illegal immigrants.

Also Read | Trump win could pressure emerging markets, but India may feel the least impact, say experts

Trump will raise revenue via tariffs and more tariffs, also reverse the energy policy, he will expand oil output and end some education support programs.

On immigration, Harris will favour increasing legal immigration while Trump will reduce all immigration. Thus Trump may tighten the labour market and especially hurt IT companies.

So what is for emerging markets (EMs) like India: A Harris win may lead to a continuation of present trends. Trump’s win by strengthening the US dollar, will lead to weaker EM currencies.

More importantly, China will retaliate against tariffs by weakening its currency which will force other Asian EMs including India to weaken their currency.

Trump may reduce the space for EMs to cut rates; he may have a negative impact on global and EM growth because of supply disruptions. But here’s the silver lining – in the EM group, the Indian economy is seen as least affected by Trump’s policies.

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