A victory for Democrat Kamala Harris would place her in continuity with Joe Biden. But prices have soared and his camp has not overcome inflation, for which he is heavily criticized by the Republican candidate. If Donald Trump is elected, energy policy would be one of the biggest changes. While the Democratic administration has poured hundreds of millions of dollars into supporting green industry, Trump wants to resume fracking to produce shale gas and oil.
The American election concerning the world's leading economic power, with its standard currency, the dollar, the result will inevitably have repercussions on the world economy. Sébastien Jean, professor at the National Conservatory of Arts and Crafts and associate director at IFRI, the French Institute of International Relations, compares the two possible results.
franceinfo: What could be the concrete consequences for Americans of the election of Kamala Harris or Donald Trump? If she is elected, would the Democrat be more of a continuation of Joe Biden?
Sébastien Jean: Yes, absolutely. We can expect continuity, perhaps a tightening, a deepening on certain aspects. For example, it wants to give targeted tax incentives in sectors linked, for example, to the decarbonization of the economy, to strategic elements such as semiconductors. It is not completely clearly defined, but this project is definitely on the table. And generally speaking, it is a continuation of what the Biden administration has been able to do so far. Including, it must be emphasized, with a very ambitious budgetary policy. There is a high deficit in the United States, which means that the deficit is used to stimulate the economy. And she will probably continue to do that.
If it is Donald Trump, on the other hand, we imagine a policy of rupture.
Yes, a lot of uncertainty too, with a stated desire for deregulation, both financial and environmental. And then a very ambitious, even somewhat unbridled, budgetary policy, which opens up a lot of uncertainty regarding coherence.
“The question we can ask is what is the balance between Trump's sensational announcements and, behind them, the people who are trying to pick up the pieces and manage things coherently.”
Sébastien Jean, associate director at IFRIat franceinfo
We saw that this was a bit like what happened during his first term.
Among the biggest changes if Donald Trump is elected is energy policy. While the Democratic administration has poured hundreds of millions of dollars into supporting green industry, the famous IRADonald Trump wants to resume hydraulic fracturing to produce shale gas and oil. What impact for us and for Europe?
This is an important part of the tragedy of this election. Donald Trump's climate skepticism is tragic, given the situation, given the need for international coordination on this. His approach is to deny the problem on the one hand, and on the other hand, to deny any need to use coordination on climate or energy issues. So, from that point of view, it is, I find, potentially tragic.
Is this still likely to favor the price of energy in the United States? Today, Michelin announces cuts of 1,250 jobs in France, and says that we are no longer competitive in terms of energy.
Probably there is an uninhibited desire to get the best possible economic advantage from inexpensive energy in the United States, without being burdened by any regulation. So in the short term, there may be an economic benefit for the United States, which they already have, because today, the price of gas or electricity is very significantly cheaper there than in the United States. in Europe. But it could well get worse, in fact.
Do you see any concern on the part of industrialists in France, in Europe, when we look at the increasingly competitive price of energy in the United States?
It's true, but this concern already exists, particularly since this famous Inflation Reduction Act, which is more than two years old, and which not only allowed the United States to benefit from its inexpensive energy, but was also accompanied by very significant tax credits to develop a certain number of sectors linked to energy, and in particular clean energy in the case of the IRA. So this concern among manufacturers in Europe exists. Maybe it will change direction a little and get worse with Trump.
Whether it is Kamala Harris or Donald Trump, the United States risks continuing to have cheap energy. The main problem is rather the risk of deregulation.
Indeed. And the risk of disrupting any coordination effort around energy and climate policy issues. And also break efforts to reduce our emissions and to control climate change together.
Donald Trump's other major priority is to strengthen customs duties: +10 to 20%, and even +60% on products imported from China. Is this a break or not with the current policy led by Joe Biden?
It would be a deal breaker, clearly. The Biden administration has placed itself in continuity with the first Trump administration and we can assume that a Harris administration would be in that continuity, with changes. But a second Trump administration would, according to the statements that have been made, be a real break with what has been done previously.
“A new Trump administration could effectively force the United States into policies that would put it outside the multilateral trade framework and WTO rules.”
Sébastien Jean, associate director at IFRIat franceinfo
And is that dangerous for you?
Yes, because it is a way of completely disorganizing what exists as a coordination architecture. And potentially cause chaotic management of international trade relations, without having a sufficiently well-defined strategy.
This is the “America First” principle, which wants to favor everything produced in the United States, and therefore American employment as well.
It's true. But when I talk about the lack of a well-established and coherent strategy, I am referring in particular to what we saw during his first mandate, such as the trade war with China which was suddenly followed by an agreement which, when we looked at it, didn't really have any coherence to respond to the problems that were posed. So there's a lot of uncertainty, a lot of disorganization, that's what's problematic. It is not necessarily the fact of feeling in conflict and putting strategic competition with China at the heart of the agenda, because that, in any case, the Harris administration will do too, but in a way probably more coherent and more respectful of a certain coordination.
But Donald Trump attacks Kamala Harris on the record in terms of inflation. The Biden administration has failed to restore prices to a reasonable level. What consequences can these increases in customs duties, particularly on products imported from China, have on inflation?
There is a double paradox here. On the one hand, it's that the Biden administration, actually, has done quite well. The US economy has managed to control inflation relatively well, but voters have difficulty recognizing it as such.
“On the other hand, Trump denounces inflation, but in fact he announces a number of measures that risk being inflationary.”
Sébastien Jean, associate director at IFRIat franceinfo
Customs duties, to begin with, are a tax on consumption. Its way of managing relations with the American Central Bank, by delegitimizing it, also risks leading to inflationary surges. Its budgetary policy includes spending at all costs, which can also have inflationary consequences. And even mass expulsions of illegal immigrants can cause labor shortages in a number of sectors and therefore inflationary pressures.
