Investor confidence as regards the US elections largely stems from the strong lead that Hilary Clinton is currently enjoying in the polls (as if they had not learnt anything about the reliability of polls following the Brexit). It is also based on a false premise.. At this stage, they trust that Donald Trump is merely grandstanding, and would become much more reasonable if elected. And should he want to behave unreasonably, Congress would anyway be able to stop him. Firstly, by underplaying the perceived risks, the wider acceptance of this idea increases the probability of Trump being elected. Secondly, this argument is fallacious. The CRFB (Committee for a Responsible Federal Budget) estimates that as it stands, Donald Trump's policies would increase the federal debt by USD 5.3 trillion over 10 years. As such, even if just a fraction of his economic programme were to be implemented, its impact would nevertheless have a massively negative effect on US public finances.
Furthermore, one should bare in mind that US institutions allow the President a tremendous amount of free reign in reviewing international trade agreements when it comes to “defending US interests threatened by unfair competition”. The introduction of tariff barriers and the reviewing of major trade agreements such as NAFTA are clearly within the scope of the President's prerogatives, and would deal a sharp blow to world trade. The Peterson Institute, an independent economic policy think tank, also considers that Donald Trump's programme would be synonymous to declaring a trade war, with potentially disastrous implications for the US economy. Lastly, it should be noted that, under pressure from the left wing of her party, Hillary Clinton's campaign objectives also include fighting the causes of popular discontent. Like Trump, her programme features a substantial rise in the minimum hourly wage, which would place US corporate margins under even greater pressure. In other words, the US elections present us with a situation of unfavourably asymmetric risks, despite the current reassuring prospects.
At best, victory for the Democratic candidate would put an unpopular president in the White House, elected primarily out of protest against her Republican rival, who would be unable to pass her budget stimulus plans, as she would lack majority support in Congress (see « All You Need is Growth »). A situation not unlike the current status quo, with probably heavier regulation. At worst, the US elections will result in a leap into the unknown, with a direct threat to world trade and US public finances, and possibly heightened geopolitical tensions.