A week is a long time in politics

If a week is a long time in politics, as Harold Wilson once said, the 12 weeks that have elapsed since President Joe Biden debated Donald Trump feel like a lifetime. Biden’s dreadful debate performance sparked panic among Democrats, then a pressure campaign that pushed the president aside in favor of Kamala Harris, who swiftly united the party and rallied in the polls. Trump meanwhile survived two assassination attempts and spun tales about Haitian immigrants in a debate with Harris, prompting self-styled childless cat lady Taylor Swift to endorse the vice president. And with seven weeks to go until election day, the race is a statistical tie!

To get some perspective on this truly unprecedented US presidential campaign and the potential impact for European business and governments, we were delighted to welcome back Charles Myers, chairman and founder of Signum Global Advisors. Charles knows the territory, having been a co-chair of Hillary Clinton’s 2016 campaign and Harris’ short-lived one in 2020, and he sees the likelihood of both surprise and continuity ahead. Here are 5 key takeaways from the discussion:

• The first “snap” election in modern US history creates a unique dynamic. The typical American presidential campaign lasts nearly two years but this one is being compressed into three months. That’s an advantage for Harris, who hasn’t had her character and policies put under a microscope for a prolonged period and has benefited from mostly favorable media coverage despite granting only two interviews. She has generated enthusiasm among black voters, young voters, and women, which may be decisive, but maintaining the recent momentum will be difficult. “Now we have a real race,” said Charles.
• Harris is more pragmatic than many realize and would likely govern more from the center than the left if elected. Charles called her “an incredibly talented politician” who rose from assistant district attorney in San Francisco to the US Senate and the vice presidency. The latter post obscures almost everyone who holds it, given that you can’t upstage your boss, but Harris did cast the tie-breaking vote in the Senate to pass the big renewable energy investments in the Inflation Reduction Act (IRA), and she has met with more than a hundred heads of state. On the domestic front, she would likely continue Biden’s economic policies, with perhaps an added emphasis on renewables. Two factors are likely to reinforce her moderate instincts, Charles says. Her overriding objective will be to serve two terms, which Democrats like Bill Clinton and Barack Obama have done by tacking toward the center. And she is unlikely to get big tax increases on wealthy Americans through a divided Congress.
• Trump is a known quantity who also would face constraints on the domestic front. He would need control of both houses of Congress to enact his proposed cut in the corporate income tax rate to 15% from the current 21%. He wants to overturn the IRA but he lacks the authority to cancel spending Congress has already approved. That leaves deregulation, particularly in the energy sector, as his most likely move. Trump wants to increase US production and exports of oil and gas to reduce the global price of fossil fuels. That would act as a stimulus for oil and gas importing nations and create headwinds for producers. The bottom line, whether Trump or Harris wins, is that the economic outlook for the United States remains bright thanks to its tech leadership, including in artificial intelligence, and continued strong inflows of foreign direct investment.
• The big differences between the candidates center around foreign policy, with big implications for European countries and governments. Expect Harris, if elected, to continue to work with allies to support Ukraine and seek to continue to expand the AUKUS security partnership between Australia, the United Kingdom, and the United States to other Asia-Pacific countries such as Japan and the Philippines. Trump, on the other hand, would look to end the war in Ukraine and could threaten to cut funding to pressure Kyiv. He also may lift many US sanctions on Russia and would almost certainly browbeat NATO allies to spend more on defense, both of which would stir tensions with European allies. And while Trump’s proposed tariff hikes would hit China hardest, he also might target European steel, aluminum, luxury goods, and Airbus aircraft with tariffs, reviving the trade disputes of his earlier presidency (potentially opening greater trade opportunities for the UK).
• Expect another tight race to be decided in a familiar handful of swing states. Charles’s base case is that Harris will win the White House while Democrats take back the House of Representatives and Republicans the Senate, where they are defending fewer seats, but nothing is a slam dunk. As we’ve all learned, it’s state results that matter for the presidency rather than the national vote. Michigan and Wisconsin are trending Democrat blue, but Pennsylvania remains a toss-up. If Harris loses there, she would need to win two of the three Sunbelt swing states of Georgia, Arizona, and Nevada to secure victory. Charles expect an October surprise or two. We already know of foreign attempts to influence the vote. A potential game-changer, if less likely, would be if Trump ditched his unpopular running mate, Senator J.D. Vance, in favor of former South Carolina governor Nikki Haley. As in 2020, fraud allegations and legal challenges could delay the official result for days or longer, but ultimately Charles expects a peaceful transition of power irrespective of the outcome.

Greater political uncertainty is now a fact of life on both sides of the Atlantic, as the recent populist surge in many European countries underscored. That uncertainty is a reflection of the inequality, rapid technological change, and geopolitical instability that confront our societies. And a reminder that we all have a role to play, as citizens, in facing up to those challenges.