The Republican candidate, Donald Trump, secured 277 electoral votes, seven more than the required minimum, which positions him to become the 47th President of the United States. In contrast, Kamala Harris, the Democratic Party candidate, received 224 electoral votes, according to AP.
Even before the final election results were announced, Trump received congratulations from NATO Secretary General Mark Rutte, European Commission President Ursula von der Leyen, and Roberta Metsola, President of the European Parliament.
“The future is going to be fantastic,” commented Elon Musk, owner of SpaceX, Platform X, and Tesla, on the election outcome. Musk spent election night with Donald Trump at the Republican’s residence in Mar-a-Lago, Florida.
The future is gonna be fantastic pic.twitter.com/I46tFsHxs3
— Elon Musk (@elonmusk) November 6, 2024
Consequences for the global economy
Economists are less enthusiastic about the election result. According to them, Donald Trump’s victory in the presidential election will have serious and immediate economic implications for the rest of the world.
Reuters reports that if Trump follows through on some of his campaign promises—such as higher trade tariffs, deregulation, increased oil drilling, and greater demands on America’s NATO partners—these actions could strain government finances, increase inflation, slow economic growth, and affect interest rates globally.
“Trump’s fiscal promises are deeply concerning—for both the US economy and global financial markets—as they could significantly increase already excessive deficits, while Trump himself poses risks to key institutions,” said Erik Nielsen, chief economic advisor at UniCredit Group, as quoted by Reuters.
Import tariffs, particularly a universal 10% tariff on all imports and a 60% tariff on imports from China, are central to Trump’s policy and are expected to have a substantial impact on the global economy. These tariffs could stifle global trade, hinder exporters’ growth, and strain public finances globally.
“A universal import duty would cause the greatest harm. If the final policy is less universal, the impact on the global economy will be reduced,” said Rogier Quaedvlieg of ABN Amro to Reuters.
Disruption in the container market
The analyst firm Drewry released a report before the election, warning that a Trump victory ‘carries a greater risk of disruption to the container shipping market, given his past policies’ and the potential escalation of trade tensions. Drewry expressed particular concern over the impact of a broad-based import duty.
“Ultimately, such tariffs would be paid by US consumers, likely decreasing overall demand for container imports, especially from China,” said Simon Heaney, senior manager of container research at Drewry.
Freight rates are expected to increase. Data from the Xenet freight index shows that average spot freight prices from China to the US West Coast doubled from $1,340 per 40-foot container on 29 June 2018—just before Trump’s first tariffs in July that year—to $2,692 per container by 1 November. Although these rates fell to $1,679 per container on 2 January 2019, they remained 25% higher than at the end of June.
During his campaign, Trump claimed that tariffs would not raise prices. However, Drewry points out that disruption to supply chains does not only have negative outcomes. Trump’s initial tariffs prompted greater diversification within the US supply chain, including more sourcing from countries other than China.
‘Trade diversification is not inherently harmful to container shipping. In fact, it can be beneficial, as increased fragmentation of production can boost transportation of intermediate parts. Any further escalation of trade tensions would likely encourage US companies to consider alternatives to China, such as Vietnam, India, or Mexico,’ added Heaney.
According to Trade Data Monitor, China’s share of the dollar value of US container imports has dropped by roughly 13 percentage points since before Trump’s first term, falling from 40% in 2016 to 27% after eight months of 2024.
Regardless of the election winner, Drewry expects the US to continue diversifying its supply chains to reduce dependence on China. However, Heaney noted that the container market may suffer if the US adopts a more isolationist ‘America First’ policy. At present, cargo imports to major US ports remain a major growth driver, up by 15% year-on-year as of August 2024.
‘This upward trend could be at risk if some of Trump’s more extreme policies, such as tariffs, are enacted. While relocating manufacturing to the US may boost exports, global trade growth could be curtailed by retaliatory tariffs elsewhere,’ Heaney noted.
Germany could lose billions of euros
The Institute of the German Economy (Institut der Deutschen Wirtschaft, or IW) estimates that a trade war following Trump’s victory could cost Germany up to €180 billion. The IW warns that Trump’s proposed import tariffs would severely impact German industries, particularly those with strong exports, such as automotive and mechanical engineering. The institute highlights that the US was Germany’s most important trading partner in the first half of 2024.
IW foresees serious repercussions from a transatlantic trade war.
“In response to this threat, the EU has developed a counter-strategy: if Trump raises import tariffs to 10%, the EU will respond with an equivalent increase. IW simulated this scenario, showing that it could reduce German GDP by more than €127 billion (at 2020 constant prices) over Trump’s next four-year term. If tariffs rise to 20% on both sides, the cost to Germany’s economy would increase to €180 billion, reducing GDP by 1.5% by the end of the Republican’s term,” estimates the institute.
While the EU’s countermeasures aim to dissuade Trump, a trade war would be detrimental for both sides.
“Especially for Germany’s export sector, which is already facing challenges,” said study author Thomas Obst.
However, IW hopes that the prospect of retaliatory tariffs will deter Trump from increasing tariffs.
“Both partners must understand that a balanced partnership strengthens their positions vis-à-vis China,” said IW economist Samina Sultan.