We've seen televised assassination attempts, surprise mid season cast replacements, scandals, threats, insults - it makes Australian politics seem pretty lame and dull in comparison.
The drama has somehow made it easy to lose sight of the fact that Donald Trump and Kamala Harris are competing with one another to gain control of the world's largest economy and military (and nuclear arsenal). What the POTUS does reverberates around the world and Australia, so closely entwined with its major ally, is no different.
Here's how the US election could impact the finances of everyday Australians.
How the US economy influences Australia
The US Dollar
The exchange rate between the AUD and USD can have major consequences Australian finances. A comparatively stronger USD makes buying things from America more expensive, which hurts Aussie investors and consumers alike. If the AUD appreciates, the opposite is true, but it can reduce demand for Australian exporters.
When interest rates are higher in the US compared to Australia, the AUD tends to depreciate - interest yielding assets in the US become more attractive to international investors.
A devalued Aussie Dollar can also have knock-on inflationary effects, however there are plenty of other levers that can cause inflation to hasten or slow as well.
Equity markets
Plenty of Aussies have a direct stake in US businesses, but the ASX also often takes its lead from how the S&P 500 and the NASDAQ are tracking. Investors in Australia often gain/lose confidence based on the performance of the United States market, where the majority of the world's very largest listed companies are listed.
Trade
US markets account for about 11% of Australian exports, while 20% of all we import comes from over there. That makes the US one of our most important trading partners. A booming US economy could increase demand for Australian products and boost growth, while weak growth could mean the opposite.
What Trump 2.0 would mean for Australia
Picture by Carlos Herrero on Pexels
In any election campaign it's difficult to separate rhetoric from concrete policy promises. With his tendency to go off script and make outlandish suggestions at his rallies, Trump makes it even harder to figure out exactly what his plans are once he gets in to office.
However, there are a few key policy points he's been fairly consistent on with ramifications for Australians.
Tariffs
The most concrete promise of Trump's election campaign has been expanding the tariffs he introduced during his first presidency. He has pitched a tariff of 10-20% on all imports, while Chinese companies might have to pay up to 60%.
It's unclear how this will look in practice, or whether Australia, which currently has a free trade agreement with the US, will be directly affected. Dr Shane Oliver, Chief Economist at AMP Bank, thinks it's possible Aussie exporters may be exempt.
"These tariffs may be on countries with a trade surplus with the US, whereas we have a trade deficit," he told InfoChoice.
However, that doesn't necessarily mean Australia will be unaffected.
"Even if we are exempt, [tariffs] are a problem for Australia because we send exports to lots of other countries, and if they have their products tariffed going into the US that means less global growth and demand for our products, particularly from China," Dr Oliver explained.
In 2023, China spent about $219 billion on Australian exports, mostly raw materials. That's a decent sized chunk of Australia's GDP (roughly 8%) so a slowdown could see the Aussie economy take a hit.
Higher unemployment, stagnating share prices and stricter lending standards are some of the possible consequences for everyday Aussies - IF tariffs slow the world economy.
What is a tariff?
A tariff is a tax on imports to a country. For example, a 20% tariff means that if a company wants to import goods worth $100,000, it would need to pay a tariff of $20,000. The goal is to promote domestic industries by making it harder for overseas companies to compete - Trump says he wants to bring back manufacturing to the US. Critics argue that tariffs make the economy less efficient and are bad for growth in the long run
Inflation and interest rates
The inflation rate in the USA can impact Australians beyond making a stateside holiday more or less expensive. High inflation in the US might mean the Federal Reserve (their equivalent of the RBA) keeps interest rates higher for longer.
This could actually be bad news for the Aussie dollar - high interest rates in the US compared to Australia make the USD more attractive to international investors. This could lead to higher importing costs from the US, one of our largest trade partners, although it could also increase demand for Aussie exports.
Dr Oliver believes a second Trump term is more likely to be inflationary.
"On balance Trump's policies, with higher tariffs resulting in higher import prices, lower labour force growth and potential moves to weaken the Fed's credibility, risk adding to inflation," he said.
Equity markets
After Trump won the 2016 election, many expected instant chaos - market crashes, global instability, mass exodus from the US. Nobel Prize winning economist Paul Krugman predicted a "recession with no end in sight" and called it a "disaster".
With hindsight, this was an overreaction. There were some kneejerk reactions as it became clear he would be president-elect, but the morning after the election markets in the US and around the world stabilised. The ASX 200 was back at pre-election levels by late November and continued to make gains in the following months.
This time around, Dr Oliver says investors are likely to wait and see what Trump does and says in the infancy of his second presidency.
"[If] Trump wins, the market reaction in the first six to 12 months will be heavily influenced by the sequencing of tariff hikes versus tax cuts," he said.
A focus on deregulation and cutting taxes would likely be a major boost to investor confidence in American businesses, while going in all guns blazing on tariffs could do the opposite.
What a Harris presidency would mean for Australia
Kamala Harris is obviously more of a conventional politician than Trump. She's careful what she says, often dancing around questions and seems to stick to approved messaging. Like Trump though, there haven't been too many details about her plans if she gets elected. However, there are still several policy suggestions to unpack.
Price controls
Harris says she intends to ban 'price gouging' on food and grocery providers. Her team says this ban will apply to essential goods during "times of crisis" - similar laws already exist in states like Texas and Florida, often applied during natural disasters.
It's not clear exactly how this would be enforced. It may mean either a cap on how much prices can go up or price controls.
Dr Oliver doesn't think this would be a great way to reduce inflation.
"Price caps usually have the effect of reducing supply. Capping the price of something reduces the incentive to supply that product." he told InfoChoice.
As we've touched on, higher inflation in the US has implications for the Aussie dollar and the RBA cash rate, although as we also mentioned Dr Oliver feels on the balance that Trump 2.0 is likely to be more inflationary than a Harris presidency.
What is price gouging?
Price gouging means a provider significantly hikes the price of a good or service to an unfair level, usually exploiting high demand or crisis. In Australia, both Coles and Woolworths have been accused of price gouging - voices on the left say that the supermarkets increasing their prices was not purely a response of input costs, but taking advantage of the inflationary environment. This hasn't been proven, and Colesworth's profit margins are comparable to those seen from grocery retailers in the US and UK.
Taxes
One of the biggest differences between the Harris and Trump campaigns is their respective tax policies. Trump wants American businesses to pay less tax while Harris is proposing a significant increase to the tax rate for the largest and wealthiest corporations, bringing it up to 28%. She also wants to increase capital gains tax from 20% to 28% for Americans who earn over $1 million.
This is a pretty classic left-right debate people have argued about for generations. For Aussies, lower corporation taxes in the USA would probably be good news for investors, and could give markets around the world a big boost. The boost to capital gains tax that Harris is proposing would likely be another headwind to US equity markets. While her plan is to make the US tax system work "for all Americans", those benefits might not flow through to Aussies.
There is another aspect to these tax policies that could have a huge impact on Australia down the line. Partly due to these suggestions, the independent Committee for a Responsible Federal Budget found that while Harris' policy plans would likely increase the deficit by about $3.5 trillion, a Trump presidency might mean the deficit goes up more than $7 trillion.
This is obviously just a projection and there's a huge margin for error either way, but US national debt is a potential looming catastrophe. In 2024, the interest bill for the US government eclipsed Defence spending, with the deficit at about $1.6 trillion and growing.
This doesn't look sustainable, and should the world's largest economy default on its debt at some stage in the future, global recession and major instability are likely consequences. However, there's a reason the US has a AA+ or even AAA credit rating from the major agencies - it has never defaulted on its debt.
Minimum wage
In the final weeks of her campaign, Ms Harris confirmed she intends to raise the minimum wage from $USD7.25 per hour to 'at least' $15. Trump has avoided answering whether he would raise it, but a campaign spokesperson said that Ms Harris' suggestion would "lower real wages and raise prices".
If she gets elected, this might not be on the agenda immediately - it could appear slightly reckless to more than double the minimum wage with US inflation still above target levels. It's a longstanding ambition of the Democrats however to raise the minimum wage, which has been unchanged since 2009. Republicans have opposed it, believing it would hurt businesses.
Similar to tax policy, you might have strong feelings about this depending on which side of the political aisle you're on. Arrowing in purely on the economic implications for Australia, higher wage standards could be inflationary, increasing production costs and giving American households more disposable income.
A wage-price spiral would likely make it more expensive to buy goods from the US should the Fed's policy rate remain largely unchanged and its dollar stable (two big IFs). For US stock prices, consumers having more money in their pocket could boost spending, but higher labour costs could hurt profit margins.
Should Aussies be concerned about the US election?
The US is probably the most influential country in the world and Australia in particular tends to follow its lead in geopolitical affairs, including militarily. It's therefore understandable for many Aussies to pay more attention to US politics than what's going on over here.
Nevertheless, from a purely economic perspective it still isn't nearly as relevant as domestic policy. It might not be as entertaining, but Australian politics likely has far greater consequences for your finances than Trump or Kamala. The next federal election in Australia will take place on or before 27 September 2025.
If you are deep in the trenches following the US election, but don't know who the leader of the opposition is here, it likely would be worth your time to learn a bit more about the policies of the major parties in Australia, and work out which is most up your alley.
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