How the World Is Prepping for a Trump or Harris Victory
The outcome of the US election will have a major impact globally, from Ukraine and the Mideast to world trade.
For the rest of the world, the shorthand of the US presidential race has been that Kamala Harris represents continuity and Donald Trump chaos.
A deeper realization is also taking hold in key capitals: America’s brief heyday as the world’s lone superpower is history, no matter who wins.
Bloomberg News canvassed the mood across time zones and the prevailing sentiment from the Group of Seven establishment to the aspiring powers of the Global South is one of caution and pragmatism. The world is fixated on the result of Tuesday’s vote — even if Washington doesn’t call all the shots any more, it still calls plenty.
America’s vibrant economy remains the world’s biggest and its politicians — especially Trump — have shown they’re ready to weaponize it. So there’s widespread fear of getting caught in the crosshairs if the next president decides to ramp up a trade war with China. Many partners have tariff-escalation plans in the drawer, ready to be pulled out.
But there’s also a growing sense of the US as an aging superpower, one that must pick its battles more carefully in a world where the number of conflicts competing for its attention is on the rise. That’s true for Trump’s ‘America first’ and Harris’ more measured approach. One British diplomat observed that the Roman Empire didn’t suddenly end. Instead, it managed a long decline.
Ukraine is already feeling the cold shoulder, Europe is facing the existential crisis of whether it can defend itself and its neighborhood, and Israel is openly defying the appeals of its main ally and arms supplier in Washington.
A Mideast official said it was demeaning for President Joe Biden to get personally involved in pushing for a cease-fire in Gaza only for it not to happen. That impression is increasingly shared in allied capitals beyond the Middle East.
Of course, the stakes of the US election remain sky high for the world. Foreign capitals — both friends and foes — have rarely been so open in showing their preferred outcome, from public endorsements to the covert efforts to meddle that US intelligence regularly reveals.
The global impact could be seismic. Should Trump win and seek a deal with Vladimir Putin that sells Ukraine out, the European Union will split between those who would welcome any opportunity for peace — however premature — and other nations who would want Europe to back Kyiv on its own. The “Trump electroshock” is how some on the continent describe it.
A truly isolationist and protectionist US is something the world hasn’t seen in nearly a century.
If you’re a historic foe like Russia trying to rebuild the Soviet orbit, a relic of the “axis of evil” like Iran, or a contender for global clout like India, the view that America’s best days are behind it is an opportunity to exploit.
North Korean troops are in Russia fighting in its war against Ukraine, Kyiv says. India is being accused by Canada of assassinating a Sikh separatist on its soil. China is providing support for Moscow amid its war in Ukraine and pushing harder in the South China Sea. In each case, the sense is that the US can’t or won’t do much to stop it.
Though she’s stuck close to Biden’s policies, Harris is seen as a different generation, less steeped in the Atlanticism of the Cold War. Some in Europe peg her as a Californian; more attuned to Silicon Valley and potentially more interested in the Indo-Pacific, where she also has family roots.
Diplomats note that containing China is a rare issue Democrats and Republicans agree on.
As for Trump, not all US allies see his unpredictability as purely a liability. Though he’s seen as friendlier to Russia and Israel than Harris would be, some hope he might surprise with a tougher line. Aspiring powers like India and Turkey, meanwhile, are quite comfortable with his more transactional approach.
Trump enjoyed playing golf with Shinzo Abe and despised Angela Merkel but his demands on Japan and Germany boiled down to the same thing: Pay more for US protection and buy more from the US.
Both have since hiked defense spending, having learned the lesson of greater self-reliance. A reduced US global role may raise the price further.
“This is not the apocalyptical contest over the future of American democracy that some — mainly Americans and Europeans — make it out to be,” veteran Singaporean diplomat Bilahari Kausikan wrote. “Biden was more consultative and predictable, but let’s not forget that Biden was not consulting you to inquire how your family is doing, but to see what you are prepared to do to advance America’s strategic goals.”
Here’s what the election outcome will mean for five key global issues:
Ukraine and NATO
More than two and a half years into Russia’s full-scale invasion, Ukraine depends on support from its allies for everything from advanced weapons to money to pay salaries. Kyiv is hoping for even more backing to convince Putin to negotiate, but the Russian president, who looks to have the upper hand, is showing no appetite for compromise, betting that allied support will gradually fade.
Harris has vowed to keep up support for as long as it takes but she’d likely face growing skepticism in Congress for major additional funding. Like Biden, Harris has so far refused to commit to grant Ukraine’s request to be allowed to use allied missiles for strikes deep inside Russia or for an invitation to join the NATO alliance, which President Volodymyr Zelenskiy says is needed to ensure his country’s security.
Trump has said he would end the war “in 24 hours” after the election by getting Putin and Zelenskiy to negotiate. He hasn’t spelled out how he’d do that but he and his running mate have repeatedly signaled Ukraine needs to be ready to make concessions. They’ve questioned why the US is spending so much to support Ukraine and argued that allies in Europe need to take up more of the burden.
What Bloomberg Economics Says:
Trump would be motivated by desire to exit an expensive and risky foreign war but constrained by fear that a sudden stop in US support could trigger a collapse in Kyiv’s forces. The net result would likely be a reduction in US aid that weakens Ukraine’s battlefield position and presses Europe to fill the gap, without opening the door to immediate victory for Russia. For NATO allies, Trump’s threat to withhold US support from any country failing to meet its obligations would add pressure to increase defense spending. Matching the 3.3% of GDP the US spends on defense each year could add $2.8 trillion to Europe’s debt by 2034. For Harris, fading support in Congress for more aid and Ukraine’s weakening battlefield position would likely raise calls for an effort to end the war through diplomacy, though not on the kind of terms Trump would seek.
Mideast
Since Hamas killed 1,200 Israelis on Oct. 7, 2023, fighting in the region has steadily spread despite US efforts to contain the violence while it continues to arm Israel. Having largely crushed Hamas with strikes in Gaza, killing more than 43,000 civilians and combatants, Israeli forces are now in Lebanon, taking on Hezbollah. Israel has also exchanged strikes with Iran, which backs the two groups — considered terrorists by the US and other nations — as well as the Houthis in Yemen, who have all but closed the Red Sea to Western ships with their attacks. Looming over all the violence is Iran’s nuclear program, which is only weeks away from developing enough highly enriched uranium for a weapon, something the US and Israel vow to prevent.
Harris pledges to ensure Israel has the means it needs to defend itself but has called for more efforts to reduce the suffering of civilians in Gaza. She’s backed the Biden administration’s repeated — and so far failed — calls for cease-fires. She endorses a two-state solution, something Israeli Prime Minister Benjamin Netanyahu has all but ruled out, though she hasn’t spelled out how such an outcome might be obtained. She dodged the question of whether Netanyahu can be considered a close US ally but called Iran America’s greatest adversary during the campaign.
Trump says the Oct. 7 attack would never have happened had he been president, without saying how he would have prevented it. He’s said Israel needed to “do a better job of public relations” and called on the country to “get it over with.” In the debate in September, he dodged the question of whether he would support a Palestinian state. He has called for more steps to isolate Iran. In his first term, he also helped broker the Abraham Accords normalizing relations between Israel and some Arab states.
What Bloomberg Economics Says:
For Harris, Biden’s stalwart support for Israel as regional underdog may appear better suited to earlier decades. If elected, she’d likely apply more pressure to limit the humanitarian cost of the conflict. For Trump, a reasonable base case is continuity in US support for Israel but less diplomatic engagement around the edges. Still, Trump’s transactional approach abroad and rock-solid MAGA base at home mean there’s more scope to be surprised. For the global economy, the key risk is higher oil prices. The geopolitical risk premium for oil stayed close to zero after Israel’s relatively restrained strikes on Iran on Oct. 26, and neither candidate is aiming to further inflame tensions.
Oil Prices Are Down as Markets See Geopolitical Risk Fading
Abundant supply and perceptions of lower geopolitical risk mean oil prices are down from the start of the Israel-Hamas war
Tariffs
The prospect of rising protectionism has central bankers and economists worried that US moves to close its market could fuel broader trade wars that will slow global growth and raise inflation.
Harris supported a Biden administration decision to extend Trump-era tariffs on China and has backed tens of billions in subsidies for clean-energy, infrastructure and high-technology investment in the US. She has embraced some trade deals but as a senator opposed others and has sought to build in protections for workers and the environment.
Trump calls for sweeping tariffs of up to 20% on imports, as well as levies as high as 60% on trade with China as a means to stimulate investment in the US, though he’s said some of the figures may be negotiating tactics. Trump argues the current international trading system is rigged against the interests of the US and promises a rebalancing if he wins the presidency again.
What Bloomberg Economics Says:
Trump’s first term brought 25% tariffs on hundreds of billions in US-China trade. That generated a lot of news headlines, but not much impact on the macro data. For his second term, his promise of 60% tariffs on China and 20% on everyone else would change the game. If Trump delivers on his campaign pledges and the rest of the world retaliates, our model shows the US share of global goods trade would crater to 9% by 2028 from the current 21%. For China, almost 90% of exports to the US would be wiped out. For Mexico and Canada, which count the US as their dominant trade partner, the drop is more than 50%. Under Harris, continuity of Biden’s “small yard, high fence” policy to block China’s access to critical technologies is a good bet. Still, Harris’ pragmatism, and a change of the guard in top policy jobs, mean the size of the yard and the height of the fence could both surprise.
Trump Tariffs Would Hammer Exports to US
Change in 2028 goods exports to the US, assuming 20% tariffs on world and 60% on China, relative to baseline of no new tariffs
China and Taiwan
US efforts to manage the competition with China have grown increasingly fraught as Beijing’s economic and military clout have expanded alongside Washington’s attempts to counter them. China has ratcheted up military exercises around Taiwan, which it claims as a rogue province. The island and its residents rely on the US and its allies to back them up in the event the pressure escalates into open conflict. In the balance is the heart of the world’s chipmaking industry — vital to economies globally.
Harris embraces the Biden administration’s approach to China, with export controls on key chip and other sensitive technologies and supports the US commitment to ensuring Taiwan’s security (but not independence, which China bitterly opposes). She’s backed the expansion of alliances across the region to counter Beijing.
Trump pledges to impose sweeping tariffs on Chinese exports in an effort to reduce dependence on Beijing in “critical areas.” Trump has claimed Taiwan “stole” the US semiconductor business, arguing it should pay more for its own security, without elaborating on what he means. He has refused to commit to come to its defense in the event of a Chinese attack, reverting to long-standing US policy. He has called on US allies Japan and South Korea to spend more on their own defense, threatening in the past to reduce military commitments there and restrict trade.
What Bloomberg Economics Says:
The disastrous economic and foreign policy costs of abandoning Taiwan limit room for maneuver under either Trump or Harris. The most likely outcome if Trump wins: a more transactional approach where US security support remains but Taiwan faces pressure to accelerate the construction of chip plants in the US and amp up purchases of US arms. We’d expect Harris to reaffirm America’s policy of strategic ambiguity — meaning hints but not commitment to defense of the island. As Biden deviated from that policy with a full-throated commitment, anything less might strike Beijing as a step back in US support. For the global economy, the stakes in the Taiwan Strait couldn’t be higher. Take out the Taiwan link in the semiconductor supply chain and the cost to global GDP could run as high as $10 trillion.
Taiwan Strait Tensions Rise
Bloomberg Economics’ Taiwan Strait Security Index and components
Migration and Latin America
The biggest wave of new immigrants to the US in years has catapulted the issue to near the top of the political agenda, with both parties now pushing for restrictions even as government data shows the influx has been critical to powering economic growth since the pandemic and has slowed this year amid tightened controls.
Harris has supported tighter limits on undocumented immigration and restrictions on asylum to stem the flow of people seeking to cross the US southern border. She’s promised to push for a bipartisan bill that would combine new asylum limits with more funding for processing and judges. She’s also advocated steps to increase legal immigration and provide a pathway to citizenship for some migrants.
Trump has called for deporting more than 11 million undocumented immigrants, creating detention camps and deploying troops at the Mexican border, as well as strict limits on a range of forms of legal immigration, including asylum, and even birthright citizenship for the children of undocumented parents.
What Bloomberg Economics Says:
Trump’s pledge to close the border and deport unauthorized migrants would come at a significant cost. Taking inflows of new immigrants down close to zero and deporting those that arrived since 2020 would put a 3% hole in US GDP by 2028. Origin countries like El Salvador, Guatemala, and Honduras benefit from remittance inflows equaling as much as a fifth of GDP a year. Mass deportations from the US could reduce the total. Harris is taking a sterner line on border security than in the past. Still, relative to Trump her policies are less severe, and would have a smaller impact on US growth and remittance flows.
Top Recipients of US Remittances
Countries receiving the largest amounts of remittances from the US, 2023
—With assistance from Fares Alghoul, Ruchi Bhatia, Ethan Bronner, Arne Delfs, Andrea Dudik, Alastair Gale, Selcan Hacaoglu, Philip Heijmans, Sam Kim, Daryna Krasnolutska, Donato Paolo Mancini, Henry Meyer, Golnar Motevalli, Alberto Nardelli, Michael Nienaber, Ania Nussbaum, Andrea Palasciano, Olesia Safronova, Misha Savic, Piotr Skolimowski, Volodymyr Verbianyi, Paul Wallace, Ben Westcott, Maeva Cousin (Bloomberg Economics), Felipe Hernandez (Bloomberg Economics), Tom Orlik (Bloomberg Economics), Jennifer Welch (Bloomberg Economics), Bhargavi Sakthivel (Bloomberg Economics) and Alex Kokcharov (Bloomberg Economics)