Trump and Harris tax policies: more debt, more inflation and high rates

In 2017, when Trump was president, Congress passed a tax cut for businesses and families; The agreement expires in 2026. Among the Republican’s proposals is the total renewal of this program and reducing taxes on companies from 21% to 15%.

“With Trump, the United States debt would increase twice as much as under Harris, with a greater impact on emerging markets, via the increase in interest rates. The Congressional Budget Office (CBO) has the central scenario that If the 2017 agreement is not renewed, the debt will increase by 32 points of GDP,” highlights the bank.

Concerns are that Trump’s program is inflationary, which will mean that the Federal Reserve (Fed) must maintain high interest rates.

“This would have repercussions on other countries, including Mexico, by putting upward pressure on their interest rates, and could reduce the risk appetite for investing in emerging markets,” he noted.

Good news for Mexico

The analysis highlights that given the review of the T-MEC in 2026, the negotiations will be tougher with Trump in the presidency despite the fact that the Republican was the architect of the new agreement in 2020. And the Republican has declared that he would prefer not to have this trade agreement.

“It is possible that it wants to tighten the rules of origin to increase content from North America and, in particular, prohibit exports by Chinese companies – particularly of cars – from Mexico,” says Citibanamex.

Among other controversial issues, there are several issues that will continue to strain the atmosphere: energy laws (which subordinate private companies – foreign and Mexican – to Mexican public companies); the ban on genetically modified corn; judicial reform; and the probable elimination of the competition and telecommunications commissions, as autonomous bodies.