February 19, 2025

Election 2024: Critical Tax, Trade, and State Factors Investors Must Monitor

Taxes, Trade, States to Watch: An Election Handbook for Investors

As we approach the contentious November 5 presidential election, investors are right to seek guidance on the critical issues at stake. Brian Gardner, chief Washington policy strategist at Stifel Financial, provides a seasoned perspective grounded in decades of experience—including time spent on Capitol Hill and a deep understanding of regulatory frameworks in financial services. Gardner’s insights on taxes, trade, and electoral battlegrounds are not just noise from Washington; they are pivotal metrics for investors as they navigate the unpredictable landscape.

The Tax Debate Looming on the Horizon

The 2024 election is shaping up to be a seminal moment for tax policy. With the expiration of key provisions from the Trump tax cuts looming in 2025-26, the debate around taxation will likely intensify following the election results. Vice President Kamala Harris has clearly indicated her intent to raise corporate tax rates, while former President Donald Trump argues for further cuts. Gardner argues that the path to extend or alter these provisions will depend heavily on the post-election makeup of Congress.

Additionally, the broader implications of tax policy will intertwine with clean-energy tax credits introduced in the Inflation Reduction Act. Investors must prepare for both candidates’ differing tax agendas, as the corporate tax rate and potential changes in regulation are poised to reshape the business landscape.

Trade Agendas and Their Economic Impact

Trade is another significant point of divergence for the candidates. While Harris seems inclined to maintain the status quo with current tariffs on China, Trump is advocating for broader tariffs and a reevaluation of international trade agreements. Gardner notes that the future of the U.S.-Mexico-Canada trade agreement will also be a pivotal policy discussion come 2026. Investors should brace for potential volatility in trade relations, as tariffs could impact both domestic markets and international competitiveness.

The Electoral Path Ahead

With the race still tight, Gardner identifies key states to monitor for initial indicators of the election’s trajectory. As it stands, Harris begins with 226 electoral votes and Trump with 219. However, battleground states such as New Mexico, Virginia, and North Carolina could flip the results dramatically—flipping any established state could lead to a decisive win for either candidate. Gardner suggests that Trump’s performance in Florida, Ohio, and Iowa could offer significant insights into his chances, while Harris must secure states like Nevada and the industrial states of Pennsylvania, Michigan, and Wisconsin to hold a narrow path to victory.

Congressional Control and Its Implications

The not-so-distant possibility of a split Congress looms large. Gardner estimates a slim Republican majority in the Senate of 51 to 49. If Harris secures the presidency, Democrats may need to gain two Senate seats to gain control. A close watch will be necessary on several states, including West Virginia and Montana, where incumbents face an uphill battle. It’s also critical to note that even if one party does gain control, any majority will be held by a razor-thin margin, likely hampering expansive legislative ambitions.

Electoral Shifts and Voter Realignment

Voter sentiment has been evolving. Gardner points to a significant realignment within the electorate, with historically Democrat-leaning white, working-class voters shifting towards Republican ideals. The Hispanic demographic is also becoming increasingly competitive, further complicating traditional voting patterns. This cycle is a clear indicator that Republicans are beginning to cut into historically Democrat territories, especially in urban centers.

The Deficit Dilemma

Despite the traditionally conservative stance on fiscal conservatism, Gardner notes that concerns over the deficit are not high on voters’ radar. There’s an emerging faction within the Republican Party that is less beholden to big business, which could lead to higher corporate taxes than expected—even if they aren’t as high as Harris’s proposed rate. How these dynamics play out from this election forward remains to be seen.

The Regulatory Environment: Trump vs. Harris

Under a Harris administration, there is speculation that aggressive antitrust measures could either continue or take a moderating turn, especially with a potentially Republican-controlled Senate. Conversely, Trump’s presidency will likely bring a prioritization of populist sentiments to federal regulatory policies—a departure from past practices that could have ripple effects across various sectors, particularly in trade.

Investor Preparedness

With mounting uncertainty, understanding both candidates’ economic policies is paramount for investors. For Trump, his populist leanings could manifest in aggressive tariffs that may impact domestic prices. In contrast, Harris’s progressive fiscal approach could lead to significant shifts in business regulations that investors must account for in their strategies.

Ultimately, both candidates come with their unique challenges and opportunities. The next week will tell us much about the electoral landscape and how investors can align their portfolios with the inevitable policies that will emerge post-election.

As we gear up for one of the most consequential elections in recent history, the key for investors will be to stay informed, be prepared for fluctuations, and remain agile in their response to the evolving political climate. The stakes are higher than ever; traditional financial principles will be put to the test regardless of the election outcome.

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