Key Insights
- Deglobalisation, support for U.S. industry, and competition with China—these touchstones are likely to inform trade policy no matter who wins the election.
- Trump would likely focus on trade deficits and use trade as a negotiating tool. Harris would likely favor a multilateral approach to competing with China.
- For investors, understanding companies’ exposure to overseas supply chains and their potential to increase prices in response to rising costs will be critical.
Deglobalisation, support for key domestic industries, and economic competition with China—these touchstones are likely to inform U.S. trade policy whether Democrat Kamala Harris or Republican Donald Trump wins the election.
But how each of the major-party presidential candidates would seek to make free trade fairer from the perspective of U.S. interests differs dramatically in scope and approach.
These divergences could have important implications for markets, industries, and geopolitics during the next president's time in office and beyond.
A Trump presidency would likely focus on trade deficits
Former President Trump and some of his key advisers have tended to regard significant trade deficits with other countries as potential signs of unfair competition and a detriment to the U.S. economy.
During Trump's four years in the White House, his administration sought to alleviate some of these imbalances by imposing tariffs on roughly USD 380 billion worth of imports, the bulk of which were from China.
In the runup to the 2024 election, Trump repeatedly has floated a 10% border tax on all goods coming to the U.S. from abroad and a tariff as high as 60% on imports from China.
Setting aside feasibility and the specific numbers, these pronouncements signal that a second Trump administration likely would take an aggressive stance on trade policy that would extend beyond China.
Such an approach could set the stage for extracting concessions, either on trade or to further other policy objectives.
Trade restrictions focused on specific industries or companies could also be in the cards, along with efforts to institute stronger rules on goods' country of origin.
IMPORTANT INFORMATION
This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.
It is not intended for distribution to retail investors in any jurisdiction.