Navigating uncertainty: The impact of the 2024 US elections on emerging markets

This has been an election-heavy year for emerging markets (EMs), thus far yielding some landmark results that are already affecting the policy outlook in several countries, including Mexico, South Africa and India. Indeed, roughly half of the global population is, or has been, directly impacted by an election this year. Still, we believe the election that’s likely to have the broadest impact across the whole of the emerging markets universe, with some of the most consequential tail risk scenarios, is the US election.

The potential return of President Donald Trump, and in particular the possibility of a Republican sweep in Congress, may mean a return to a policy agenda that prioritizes US protectionism and isolationism possibly to the detriment of free trade and international cooperation between the United States and its partners around the world. The precise policy mix is difficult to forecast, as are the implications, since policy priorities (in both parties) can have offsetting macro effects. On the whole, however, we see a much more difficult environment for emerging markets under Trump, especially with respect to long-term growth expectations, and especially in the event of a Republican sweep, whereas a Kamala Harris victory is more likely to represent a continuation of the status quo on issues relevant to EMs.

In this paper, we cover the following four broad election outcome scenarios and provide an overview of the potential implications of each for US trade policy, foreign policy and domestic policy. We also put a focus on some of the more extreme cases and their implications for emerging markets.

1. Trump with a Republican Congress
2. Trump with a divided Congress
3. Harris with a divided Congress, and
4. Harris with a Democratic Congress

Given the lack of clarity in polling and the uncertainty around policy implementation, it’s extraordinarily difficult to make any sweeping predictions, but on the range of outcomes and potential scenarios, we can provide perhaps a bit of clarity.