In Europe we are not directly affected by the US election, but it’s also very important for Europe because of the deep economic ties between the two continents.
Trump and Europe
Looking back four years, Donald Trump's US election win hit the world in 2016, after the result surprised many observers and experts. Donald Trump was then a blank slate on the big political stage in Washington. At that time, Trump was underestimated, and was able to score points with many Americans through his focus on "Making America great again", even if this resulted in tensions with other countries. Relations between the US and China, and between the US and Europe were severely strained.
The concern that many Europeans currently have is that the trade war that the US waged with China in the last two years will spill over to Europe. Thus, a second term of Trump's office could worsen the relationship between the US and Europe and threaten the economy with new tariffs. The trend towards anti-globalisation could continue, and this would be problematic for Europe. Europeans like to act multilaterally – that is how the EU with its 27 states works.
Is Biden better for Europe?
If Biden wins on 3 November, many measures taken by the Trump administration could be reversed. In foreign policy, he advocates a multilateral approach (similar to the Europeans) and a renewed rapprochement with countries that are currently marginalised under Trump.
Another important point could be Biden's stance on global warming. A new "Green Deal" would be possible. In his election mandate, Biden advocates a two trillion-dollar climate change package that includes the promotion of clean energy, the reduction of greenhouse gas emissions and the improvement of infrastructure.
His plan is largely consistent with the EU's seven-year budget and reconstruction fund, which are strongly geared towards a greener economy. This issue could bridge the gap and bring both sides closer together.
Points of contention could, however, remain the same among both candidates. The main issues are deregulation and the introduction of a "digital tax", in which Europeans are particularly interested.
Is Biden bad for the stock market?
In response to the increasing chances of Democrat Biden, the stock markets could react with price losses after the US election, as there is a widespread opinion on the trading floor that a Biden victory would have a significant negative impact on the profit development of US companies.
However, if one looks at the election platform and assesses the impact of higher corporate tax rates, more investment and lower tariffs, the measures are aimed in the same direction as in Obama and Clinton's time, and could therefore also lead to a similar level of medium-term S&P 500 profits. The choice in itself should not have a major impact on the market as a whole.
A negative scenario for the stock market would be the repetition of a hanging vote and the contesting of the election by one of the two candidates.
The real difference has nothing to do with policies
A Trump election victory carries the risk that his uniquely toxic combination of anti-science propaganda and organisational incompetence will unnecessarily prolong the coronavirus pandemic and increase the death toll. On the other hand, under Joe Biden, it’s more likely that the US will start wars. The Democrat was in favour of attacking Bosnia and invading Afghanistan. He was a great supporter and pioneer for the Iraq war. Currently he is threatening a war against Venezuela and new cold wars against China and Russia. He also promises to further increase the defence budget. Donald Trump was the first US president in decades to negotiate directly with the Taliban to sign a peace agreement and bring all American troops home.
Despite the usual hysteria in election year, there is no real difference between Trump and Biden on most of the important issues. Neither of them promises to introduce supplementary unemployment insurance. Neither of them is in favour of the green new deal. Neither wants health insurance for all Americans. Both give priority to businesses over individual citizens, and neither would significantly liberalise immigration policy. The real difference between Joe Biden and Donald Trump has nothing to do with their policies. No matter who wins, Americans could be facing another turbulent four years.