Recently, former US President Trump will give a speech on the economy in Savannah, Georgia. A senior adviser to Trump revealed that Trump will propose a set of "carrot and stick" economic policy plans in this speech. On the one hand, Trump will promise to personally recruit foreign companies to invest and operate in the United States, and will propose a series of incentives to attract foreign investment, including tax cuts, reduced regulations and the provision of federal land. On the other hand, he will once again threaten to impose severe tariffs on imported products. Given that economic issues are currently the most concerned issue for American voters, Trump's speech seems quite strategic.
As China gradually rises and occupies a more important position on the international stage, the United States is obviously facing tremendous pressure. During Donald Trump's tenure as the previous US President, he put pressure on China through various means. At present, with Trump likely to usher in a second presidential term, tariff policy has once again become the focus. Trump proposed to increase tariffs on all Chinese imports to 60%, a move that has aroused widespread doubts and discussions. Some people are worried that China will take the same retaliatory measures. In response, Trump said that he does not care about these possible countermeasures. In another signal that deserves attention, former President Donald Trump began accepting political donations in cryptocurrencies earlier this year and praised innovation in the field at a Bitcoin conference in Nashville. This summer, Trump told cryptocurrency executives: "You are the modern Edison, the Wright brothers, the Carnegies and the Henry Fords. What you have done in your life has the potential to outlive all of us." Trump emphasized to the rapt Nashville audience: "Today, I am full of respect and admiration for the achievements of the Bitcoin community," and promised to replace Gary Gensler, chairman of the U.S. Securities and Exchange Commission, who is unpopular with cryptocurrency companies, with a more supportive candidate. These remarks directly led Bitcoin sprinted to the $65,000.
Given that the United States is a global superpower, once Trump is elected, his economic policies will not only determine the future economic direction of the United States, but may also have a profound impact on the global economy. Many people are worried that Trump's "America First" policy may lead to international trade frictions and even evolve into a trade war, thus triggering tensions in the global economy. However, economic games between countries are inevitable, and such games are bound to harm the interests of some countries. For American voters, they are more concerned about whether Trump's policies are beneficial to the United States itself, rather than whether they are beneficial to other countries.
In order to show the public his "ability to control" Sino-US relations, Trump did not always maintain a tough stance on China. Recently, he particularly emphasized that Russia and China are not enemies of the United States. In his view, China and the United States can live in harmony. This statement is actually hinting to the American people that if he is elected, Sino-US relations will improve, which is undoubtedly beneficial to the United States. As for the results of the US election, China does not care. However, both Trump and Harris should realize that China does not take the initiative to provoke incidents, but is not afraid to face any challenges.
A few days ago, Trump and Harris had their first televised debate, and one of the focuses of the debate was the policy of imposing tariffs on China. Trump still insisted that if he was elected, he would significantly increase tariffs on China. Harris did not explicitly oppose this proposal, but she sarcastically said that Trump's policies would cause price increases and inflation. Although Harris had a slight advantage in the debate, it also led to her being accused of having a pro-China tendency. In order to prevent the Trump camp from making a fuss about this, Dai Qi's team quickly announced the imposition of additional tariffs on China, in order to shape Harris's tough image on China.
This debate is also an opportunity to observe the two candidates' positions on China. When talking about economic issues, the two mentioned China many times. Trump said that by raising tariffs, the pressure on other taxes in the United States can be reduced. He specifically mentioned China, saying that the federal government has earned billions of dollars in revenue through tariffs, so if he is re-elected, he will further increase the tariff rate. Harris made it clear that these high tariffs actually caused the American middle class to spend an additional $4,000 a year. Regarding the imposition of tariffs on China, Harris's judgment is closer to reality. The ultimate goal of the United States's tariffs is to protect domestic jobs and industries, but the problems of the US manufacturing industry cannot be solved at all in the short term. Although the Biden administration has worked hard to reshape the industrial chain and supply chain in Southeast Asia, no significant results have been seen so far. Therefore, the United States still has to import low-end consumer goods from China. When demand remains unchanged, the larger the tariff barriers, the higher the price. Moreover, the additional tariffs are often passed on to local consumers as costs when they are imported to customs.
In the debate between Trump and Harris on tariffs, it is not difficult to see that the arguments of both sides are mostly sophistry. Although Trump's strategy may win some economic benefits for the United States in the short term, the price paid is the loss of the United States' international credibility. More importantly, the anti-China stance shown by Trump and Harris in the debate has added new uncertainty to Sino-US relations. This means that no matter who will be the US president in the future, the game between China and the United States will continue. Judging from the development trend of Sino-US relations in recent years, the anti-China stance has become one of the few unanimous views of the Republican and Democratic parties in the United States.
What impact will Harris have if she is elected?
Assuming that Harris wins the election, the current mainstream analysis of the market, based on Harris's full endorsement and support from Biden, the Democratic Party's temporary "change of leadership" and the campaign platform basically inheriting Biden's policies, etc., believes that the Harris government's policies will be a continuation of the "Biden route" of the past four years. Based on the following three important observations, we believe that if he is elected, he is more likely to embrace or even promote the radical Democratic Party line of the Obama era, rather than Biden's moderate and middle line.
First, from the source of Harris' power, that is, the pressure and support Biden faced before and after his withdrawal from the election: after Biden's poor performance in the presidential debate exposed his health risks, progressives in the Democratic Party, such as Sanders, AOC, the Congressional Black Caucus, the Latino Alliance, the Clintons, and American labor unions, have always strongly supported Biden to continue his campaign, while Pelosi and Obama have used various direct and indirect means to pressure Biden to withdraw from the election.
Second, from the process of Harris's appointment of the vice presidential candidate, Biden and the Clintons both proposed to choose Pennsylvania Governor Shapiro as the vice presidential candidate, which would maximize the probability of winning the election, while Obama and Pelosi recommended Waltz, who valued Waltz's ability to continue to promote the so-called "progressivism".
Third, from the composition of Harris' campaign team, Bloomberg reported that as soon as Biden withdrew from the election, Harris reorganized the campaign team to vigorously absorb and reuse the core members of the original Obama campaign team, and "marginalized" the members of the original Biden campaign team.
Finally, from the composition of the core decision-making think tank team, Biden's core decision-making team is mainly composed of experts in various fields, and is willing to adopt different opinions that are of substantial help. For example, in 2021, Biden issued large-scale consumer subsidies when the US economy had already recovered significantly. At that time, when mainstream American voices such as Powell and Yellen claimed that inflation was controllable, economist Samuelson repeatedly wrote articles in the Wall Street Journal and other media accusing this policy of causing US inflation to get out of control. When US inflation rose across the board in 2022, Biden received Samuelson at a high level in the White House and humbly sought his economic policy opinions. This made Samuelson the most important economist influencing the White House's economic policies after 2022, and data such as the US core CPI were also temporarily controlled under his policies.
With the "radicalization" of candidates from both parties in the United States, how to reduce the impact on the United States and the world order, the results of this congressional election are more important than ever. Perhaps for the United States and the world order, the best result of this US election is: Harris wins (she is more controllable than Trump), but the Democratic Party loses at least one of the Senate and the House of Representatives, making it more difficult for Harris' radical policies to be implemented. Correspondingly, the worst result of this election is that Trump wins and the Republicans control both the Senate and the House of Representatives. In this case, the "destructiveness" brought about by Trump without any constraints and the degree of turmoil in global geopolitics may be "stormy". Let's wait and see!
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