Tuesday’s election will transform U.S. taxes and global trade relations

Tuesday’s U.S. election will hit the American economy on multiple levels. From how taxes are set to how the country trades, both candidates—Kamala Harris and Donald Trump—are pitching radically different economic agendas.

Who wins the White House, and which party takes control of Congress, will shape everything from tax policies to the country’s stance on global trade, immigration, and energy. Each move will hit consumers, affecting prices, borrowing costs, and even the availability of jobs in key industries.

With both candidates ready to use executive power to push forward on trade and immigration, the outcome is about more than just who sits in the Oval Office. Congress will weigh heavily on tax policy and could either help or hinder the next president’s agenda. Here’s what each candidate is proposing and what it means for the economy.

Taxes: Trump’s cuts vs. Harris’s targeted hikes

Trump has placed tax cuts front and center. He’s promising to extend his first-term tax cuts, which expire next year, and he’s eyeing even bigger reductions, especially for corporations. Trump is also pushing for tax cuts on tips, overtime pay, and Social Security benefits.

To offset some of the revenue loss, Trump plans to slap new tariffs on imported goods. “Our focus is on keeping money in the hands of Americans,” Trump told supporters at a rally in Las Vegas.

Harris, in contrast, has a narrower approach. She wants to keep the 2017 tax cuts but only for those earning under $400,000. For wealthier Americans, Harris plans to raise taxes, specifically increasing the corporate tax rate and imposing a billionaire minimum tax.

Additionally, she’s pushing for child tax credits and relief for small businesses. Harris’s proposals aim to shift tax benefits away from corporations and toward middle-income families, her team stated, positioning her tax policy as a “protection for working families.”

With the 2017 tax cuts ending next year, Congress will need to act fast to avoid automatic tax hikes on the middle class. A single-party sweep in Congress would make it easier for either candidate to pass their tax plans. If Congress is split, expect a long negotiation on any tax changes. Analysts see tax policy as the top agenda item in the next session, regardless of who wins.

Trade: Trump’s tariffs vs. Harris’s continuity

Trump wants to double down on tariffs, aiming to push manufacturers to bring production back to the U.S. He’s eyeing tariffs of at least 10-20% on all imports and as high as 60% on imports from China. This plan could force many U.S. businesses to rethink their supply chains, though the risks are high.

Bloomberg Economics estimates that a 20% across-the-board tariff could cut U.S. GDP by 0.8% and push inflation up by 4.3% by 2028 if China alone retaliates. If other countries also hit back, GDP could fall 1.3%, though inflation might level off due to reduced economic demand. 

On the other hand, Harris signals continuity with the Biden administration’s trade stance. She’s warned that Trump’s plan would function as a “national sales tax,” hitting consumers hard. Both Trump and Harris say they’ll block Japan’s bid to acquire U.S. Steel Corp., showing rare agreement in opposing foreign investments in critical industries.

The president has significant power to take direct actions on trade, meaning quick changes could be expected depending on the winner.

Immigration and labor: Hardline vs. Pragmatic approach

Immigration policy will see a stark shift depending on the election’s outcome. Trump is pledging a massive crackdown on undocumented immigrants, which would be one of the largest deportation efforts in U.S. history.

Industries like construction, hospitality, and retail, which rely on immigrant labor, would be hit hard. Economists predict this move could disrupt business operations and cost billions in implementation.

Harris offers a more pragmatic approach. She wants to reintroduce legislation to address illegal border crossings, a step she’ll need bipartisan support to achieve if Congress is divided.

Her stance contrasts sharply with Trump’s hardline approach, focusing instead on balancing border security with immigrant labor needs. Presidents hold broad powers in immigration policy, so changes here could happen quickly post-election.

Energy: Fossil fuels vs. Clean energy transition

Trump’s energy agenda revolves around fossil fuels. He’s adopting a “drill, baby, drill” stance, pledging to ease regulations on oil, gas, and coal production. He wants more federal land opened for drilling, arguing it will lower energy prices.

Trump’s camp says these measures will counter rising costs by expanding domestic energy supplies and creating jobs in traditional energy sectors.

Harris, meanwhile, is leaning into clean energy. Her plan focuses on reducing household energy costs while addressing climate change. She’s committed to funding clean energy projects and protecting public lands from fossil fuel development.

Harris’s approach reflects her agenda to tackle the climate crisis, though her focus on renewable energy could reshape energy markets and jobs.

Deficit impact: Which candidate’s plans add more debt?

Both candidates will increase the deficit, but Trump’s plans will add nearly twice as much. The Committee for a Responsible Federal Budget (CRFB), a nonpartisan watchdog, estimates Trump’s proposals would drive up the deficit by $7.75 trillion over the next decade.

For Harris, it’s an estimated $3.95 trillion, still significant but much lower than Trump’s. Larger deficits typically lead to higher interest rates, impacting borrowing costs for both households and businesses.

Investors are cautiously optimistic despite rising deficits, with steady demand for Treasury bonds even as the U.S. deficit rose to $1.83 trillion by the end of September. U.S. debt is already approaching 99% of GDP, and Bloomberg Economics predicts that Trump’s tax cuts could push it up to 116% by 2028.

Harris’s proposals are more conservative but still forecast an increase to 109% of GDP. A divided government could slow down deficit growth since any major tax or spending moves would require cross-party support.

Tuesday’s election will set the course for U.S. taxes, trade, immigration, and energy. Both candidates bring extreme policy contrasts, but the eventual outcome will depend not only on the presidential vote but also on Congressional control. The next steps in U.S. economic policy are anyone’s guess, but all signs point to major changes ahead.