Analysis: For both the EU and Czech Republic economy, a Harris victory would be more beneficial

Prague – For both the European and Czech economies, it would be more advantageous if the Democrat Kamala Harris won the American presidential elections in November. On the contrary, holders of American shares would profit from the victory of the Republican Donald Trump. This follows from an analysis presented today by analysts of the company Cyrrus. Surveys suggest that this year’s White House race will be close.

The chief economist of Cyrrus Vít Hradil noted that Trump has a greater tendency towards protectionism than Harris, which is disadvantageous for the European Union and the Czech Republic. “Europe is a continent whose prosperity depends on the good functioning of cross-border trade cooperation,” said Hradil. According to him, it is more likely that Trump would introduce tariffs or other protective measures against European car production, which could result in losses of tenths of a percent of gross domestic product (GDP) for European countries.

From the election programs and previous actions of both candidates, it also follows according to Hradil that Trump as president would probably take measures that could worsen the competitiveness of the EU compared to the USA. As an example, he mentioned Trump’s promises on reliefs for the American fossil industry or possible tax cuts for large corporations. “In Europe, for budgetary reasons, we cannot afford to participate in the race to see who can reduce taxes the most, so it would mean a decline in European competitiveness,” said Hradil.

Europe would probably benefit from Trump’s victory in terms of American migration policy, as Trump’s promises to limit labor migration might result in restricting the departure of skilled workers from the EU to the USA. Another advantage of his victory would be that his economic plans involve less debt than Harris, so American government bonds would not become as expensive. Their price is also linked to the prices of European bonds, and their significant increase could complicate the servicing of national debt for European countries.

From the perspective of investments in American assets, Trump’s victory is more advantageous, said Cyrrus portfolio manager Tomáš Pfeiler. “Trump’s economic measures can be considered growth-oriented, and that’s something American investors want to hear,” he said. Lower taxes, according to him, would support the profitability of American companies, and thereby the growth of their shares. Growth-oriented economic measures would also help strengthen the dollar against the euro. Harris’s victory would, given the expected greater budgetary expansion, increase the yields of American bonds. (October 17)