If he wins this year’s presidential election, Donald Trump’s plans for a universal 10% tariff on all imports and tariffs of up to 60% on imports from China specifically would subtract up to 1.5% from US GDP and trigger a rebound in inflation that could force the Fed to raise interest rates again. Read more about what Trump's re-election would mean for the US economy here. 

It is not clear that Donald Trump, if elected, would gain much from trying to force Fed Chair Jerome Powell out of the role only a year before his term expires anyway. Trump might instead focus his efforts on securing Senate approval for future nominations to the Fed Board of Governors. Read more about Trump and the question of Fed independence here.

All the signs suggest that a second Trump administration would take a more protectionist approach to trade. Export demand in Mexico, East Asia and ASEAN would be particularly hard hit by a universal US import tariff or a dollar devaluation, and those measures would in all likelihood lead to a gumming up of the friendshoring process. Learn more here. 

We'd expect higher Treasury yields if Donald Trump were president rather than Joe Biden (or another candidate). Another Trump term would also be a headwind for equities – especially outside of the US – though it wouldn't necessarily pop the bubble inflating around AI hype. See here for more on the market impact of another Trump presidency, and our latest equities market forecasts here.

Donald Trump’s previous tariffs did surprisingly little damage to China’s economy, but China may find it harder to shrug off the damage in a rematch. Mr Trump is threatening larger tariff increases if he is elected again. And the factors that cushioned the impact last time – currency depreciation and tariff evasion – would probably provide less protection. See here for more on the impact on China of another four years of Trump.