Trump wins, Macron loses – What are the consequences?
Bruno Cavalier, Chief Economist ODDO BHF Asset Management.
KEY HIGHLIGHTS:
- Occasionally, a country’s trajectory changes due to an unexpected political event. The assassination attempt on Donald Trump and the dissolution of the National Assembly in France are game changers.
- In the United States, a Trump-inspired economic policy in 2025 would involve tax cuts, increased tariffs, and an end to support for Ukraine.
- France has rarely appeared so ungovernable at a time when crucial choices need to be made to improve the public finances.
“Cleopatra’s nose: had it been shorter, the whole face of the world would have been changed“. This thought by Blaise Pascal reminds us all how small events can have major consequences.
On July 13, if the bullet aimed at Donald Trump had deviated by a few millimetres, it would have blown his skull apart rather than grazing his ear. Today, he wouldn’t be seen as a sort of miracle survivor and, consequently, as the overwhelming favourite to win the US presidential election. On June 9, if Emmanuel Macron had allowed himself a good night’s sleep to digest his defeat in the European elections, perhaps he wouldn’t have made the reckless decision to dissolve the National Assembly, which plunged France into political chaos not seen in decades.
Towards a second term for Donald Trump
A few weeks ago, it was accepted that the outcome of the November 5 presidential election would be decided by a few thousand votes in a handful of swing states. Embroiled in various legal affairs, Donald Trump seemed to have a slight edge in voting intentions, but nothing decisive. Two recent events have changed this outlook.
On June 27, a TV debate between the candidates showed that Joe Biden had obvious physical and cognitive weaknesses. The Democratic camp’s denial on this issue was no longer tenable. Several donors openly called for Joe Biden to withdraw his candidacy. Pressure was mounting when a second event occurred. On July 13, Donald Trump narrowly escaped an assassination attempt. Could one imagine a starker contrast between a sitting president struggling to move and speak and his opponent who, though wounded, showed his fighting spirit!
No election is ever decided until the vote has taken place. But there’s no denying that Donald Trump now has better chances of victory. First, he has received financial support from wealthy individuals, including Elon Musk. Second, it’s more difficult for the opposing camp to present him as a threat when he has just been the victim of an attack. Lastly, this event, by reducing the pressure for Joe Biden to step down, diminishes the Democrats’ chances of reinvigorating their campaign with a new candidate.
Under these circumstances, we must carefully consider what the main priorities of a second Trump term might be. We can only judge the former president’s stated intentions here, knowing that many factors can come between a plan and its implementation. Let’s focus on two key issues: international relations and the economy.
