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From conflicts in Europe and the Middle East, to global issues like trade and migration, whoever becomes the next president of the United States will have a huge impact on the rest of the world.Bloomberg’s Flavia Krause-Jackson and a team of reporters around the world asked government officials one question: How are you preparing for what happens next? Today on the Big Take podcast, she joins host David Gura to share what they found.Listen and follow The Big Take on Apple Podcasts, Spotify or wherever you get your podcastsTerminal clients: click here to subscribe.
Here is a lightly edited transcript of the conversation:
David Gura: The US presidential election is one day away. And on Tuesday, as tens of millions of Americans head to the polls, there is a general sense of unease around the world as global leaders brace themselves for the uncertainty of what comes next.
Flavia Krause-Jackson: There was always a sort of a sense, at least in the west, that as long as the US got it right, the world order would be okay. And I think what the likes of the UK and France and Italy and Germany have seen is that the process, the elections, have become increasingly unhinged.
Gura: Flavia Krause-Jackson is an executive editor at Bloomberg, who oversees our coverage of economics and politics in Europe, Africa, the Middle East, and Latin America. And in the run-up to Election Day in the US, she gave an assignment to some of Bloomberg’s 2,700 reporters and analysts based all over the world.
Krause-Jackson: We really canvassed all the capitals from Brasilia via Dubai, Beijing, by way of Berlin, et cetera, and we wanted them to speak to some of the smartest people in government speak openly, or on background about how they were wargaming the scenarios.
Gura: The scenarios being either a Kamala Harris presidency or another Donald Trump term. I'm David Gura, and this is the Big Take from Bloomberg News. Today on the show: the global stakes of the US election, and how world leaders are bracing and preparing for the impact it’ll have beyond America’s borders.
Gura: The next US President will come into office at a time when there are major conflicts taking place in several parts of the world. The war in Ukraine is well into its third year.There’s concern about a wider war in the Middle East. And tensions are high between China and Taiwan. I began by asking Bloomberg's Flavia Krause-Jackson: how the course of the Israel-Hamas war could change depending on who wins the election, Kamala Harris or Donald Trump. She started with the vice president.
Krause-Jackson: Kamala Harris has something going for her, which is essentially the kind of credibility that comes also with who she's married to. She can speak to the Jewish community with a degree of authority, and she also brings a fresh perspective. She, in her words, still believes in the two state solution— something that Netanyahu has essentially taken off the table. So the big challenge for her is how she translates that rhetoric into practice. Because what we have actually seen to a degree, or at least how the Middle East perceives it, is that the US is having a bit of an emperor without clothes moment, right? They can't quite understand why the US is the biggest supplier to Israel and why it's incapable or unwilling to use this leverage. Now, when it comes to Donald Trump, it's an entirely different scenario. He often likes to say that when he was president, there were no wars, and that just like he would in Ukraine, he would fix it overnight. Similarly, he would do the same in the Middle East. And there has been some reporting out there that he is essentially told, Netanyahu in no uncertain terms that he wants this conflict to end in January before he's sworn in, if indeed he is elected. So I think there is a sense that the approach is much more transactional. Of course, he is seen to enjoy very good relations with the Gulf countries, specifically with MBS in Saudi Arabia. They want a deal. They want arms. And there's nothing that Donald Trump would like more than to be able to say that normalization happened under him.
Gura: When it comes to Ukraine as Flavia mentioned Donald Trump has also said he would bring a speedy end to the war there. But in Bloomberg's conversations with officials around the globe, there is great concern that Trump will make good on his promise by pushing for a deal with Russia's president, Vladimir Putin.
Krause-Jackson: It's very hard to predict how Ukraine will play out. So, how do you appeal to Trump's transactional nature? And one idea that sort of has been touted by some at NATO is to say well, you know, Mr. President If you do that, you will look weak in the eyes of China and they might exploit it in a different way. You don't want to look weak next to Xi Jinping. So the strategy there is really to appeal to his sense of ego and a sense that he is standing head and shoulders above some of these other rivals. So that would be the playbook, if you will, of how to sort of deal with the potential that when he comes in, Putin has waited long enough. Putin's pretending that he wants Harris to be in power. I think he's quite looking forward to having Trump. I mean, they've clearly had a relationship. That much was made clear by the Bob Woodward book. So, I think the big question is, come 2025, will Ukraine be sold up the river or not? And what can Europe do about it?
Gura: And if Harris wins…
Krause-Jackson: It's not particularly promising for— or it's pretty dispiriting for Zelensky in the Harris scenario, because it's, it's quite clear that war fatigue has dug in, right? So, a few years ago, when Zelensky went to Washington, he was greeted as a war hero, everyone in Congress was supportive, there was, the money was flowing, it's just a lot harder three, four years down the line to get Americans to care about a conflict that's far away from home.
Gura: And to make that ask for money as well.
Krause-Jackson: And to ask for money. So she's going to have to gussy it up, with lots of pretty words. But I think the message, even though not as brutally delivered, will be the same. It'll be massaged in a certain way, but it'll be, listen, even the 50 billion asset that has been sort of put forward in terms of a loan, the well has run dry and the pressure to bring Zelensky to the negotiating table is big.
Gura: So the third conflict I want to touch on is a potential conflict, so that's China and Taiwan. I imagine there's a lot of anxiety in Taipei about who wins this election. We've kind of gotten a variety of answers from former President Trump about how he might approach a Chinese invasion of Taiwan. Do we have a clear sense of what he would do, how he would approach that potential conflict? And then, how would a President Harris approach it?
Krause-Jackson: The one thing has become very clear, both from Harris and Trump, is that whilst they are essentially turning their back on other conflicts and prioritizing one thing: That thing is China, and that thing is containing its biggest economic rival. So the big question then becomes, will the US come to Taiwan's defense should Taiwan come under attack? And there, the answer also is uncertain because at the heart of all this is the world's chip making industry. Taiwan is sitting on something extremely valuable that everyone wants a piece of. It's obviously not able to defend itself. And the question then becomes to what extent either side would get itself involved militarily. And we're looking at a scenario that may honestly be decades from actually materializing. And so a lot of what you're going to see is posturing and everyone trying to sort of unpick different sides. A lot of this is going to play out in the South China Sea. So to what extent China can lay claim and essentially bully its way in those waters, neutralizing and pushing back all sorts of rival claims from the likes of Vietnam, Philippines, et cetera. So it's a slow process. And even though the US keeps exercising its right of passage, the direction of travel there is that China is increasingly turning on the screws.
Gura: Bloomberg analysts recently forecasted what the fallout could be if China were to assume full control of Taiwan, and Flavia says, they concluded it would be “disastrous” for the global economy After the break: so what would it cost to implement Donald Trump's plan to deport 11 million undocumented immigrants from the US? And what about those giant tariffs he's promising? We'll talk about what those plans could cost the US and the rest of the world.
Gura: One of the biggest issues in the US presidential campaign has been immigration. And the platforms put forward by former President Trump and Vice President Harris stand in stark contrast. Bloomberg's Flavia Krause-Jackson says the policies the next president puts in place will have massive implications.
Krause-Jackson: There is the sort of the politics of it that are indistinguishable, to a degree, from the economics. And I think when Trump calls for the deportation of 11 million undocumented immigrants and talks about creating detention camps and deploying troops at the Mexican border, what is lost in all this is that this is extremely expensive.
Gura: According to Bloomberg Economics, if Donald Trump were to carry out that plan – if he were to reduce the flow of new immigrants to close to zero, and deport those who’ve arrived since 2020, that would put a 3% hole in US GDP by 2028. But what about Kamala Harris' plans? Bloomberg Economics also took a close look at what she’s proposed:
Krause-Jackson: Harris, however, has been kind of advocating for tighter limits on undocumented immigration and restrictions. But by Bloomberg economics calculations, that would be, you know, a lot less expensive. I mean, the other thing that's also, of course, getting lost in this is that it's the remittances, right? So when there are people in the US earning money, the money that's being earned is going back to the country—Gura: They’re sending it home.Krause-Jackson: —they're sending it back home—Gura: Yeah.Krause-Jackson: —and that has a net positive effect.
Gura: Something else world leaders are gaming out is how the winner of the US presidential election would reshape trade. Former President Trump has pledged to impose more, highly punitive tariffs, which he says would compel companies that have moved operations overseas to come back to the US.
Krause-Jackson: If he follows through on his promise of 60% tariffs on China and 20% on everyone else, that's a game changer. So, here is what the figures are, and they're startling, is that our model shows that the US share of global trade would crater to 8.5% by 2028 from the current 20%.
Gura: Wow.
Krause-Jackson: And that would have a knock-on effect on Mexico and Canada. But world leaders and diplomats have sort of really stopped trying to sort of reason with Trump about the economics of tariffs, trying to sort of convince them they're not good. They spike inflation. It's a way of passing on, that cost to consumers, you know, just because you erect these tariffs, you don't necessarily change behavior overnight. He's just not buying those arguments. And if you can't convince someone, then the question is adapting, right? Bracing for impact, it's going to be ugly. No one comes out of a winner in trade wars. But, at least this time, Europe, at least, which is kind of getting squeezed between China and the US and feeling like it has to pick sides, has at least something to show for it and can respond, you know, in kind.
Gura: Flavia, you talked about how a lot of high-ranking officials, world leaders look at Kamala Harris and sort of feel like they don't know her policy positions well when it comes to foreign affairs. Do we know much about what would happen to trade if she were to be elected president? Is the assumption that it would be kind of status quo a good one?
Krause-Jackson: I think that would be correct. I mean, where Kamala Harris really shines and comes alive is when she talks about social issues, when she talks about abortion, when she talks about social justice, when she's able to draw on her background as a prosecutor, when she's able to talk about the legality or illegality of Trump's actions. But you know, when it comes to tariffs, I mean, she's essentially supported the Biden administration's decision to extend those Trump era tariffs on China. She backs, you know, the tens of billions in subsidies for clean energy and infrastructure. And she's embraced some trade deals, but this is by no means her area of expertise. So I think we would have to expect her to really be delegating that to others.
Gura: As government officials worldwide wait for the outcome of Tuesday’s vote, no matter who the winner is — Flavia says one thing is clear — that the United States’ standing has changed in recent years.
Krause-Jackson: I think if I was to pull back the lens, generationally, I would go back, to a time both, in the immediate post-war, if you go to countries like, Germany and Italy and the UK, there was a depth of gratitude for America's role in essentially saving Europe from the Nazis. And there was a sort of embrace of everything that was American culture. And that kind of spawned an economic revival in many of these countries, an enthusiasm for American literature, culture, wealth, fashion, and everything. And then Europe and the rest of the world fell out of love with the US and what it represented because it no longer represented these good values. What emerged from the wars in Iraq, for example, was, oh, the US lies or it meddles in other countries. It doesn't like a leader in a certain country, it will get involved and depose them. And so the narrative around the US started changing. There was a sense of like, hold on a second, we're getting scolded and America's wagging its finger at us, but they also do bad things and we can point to those bad things. So somewhere over those decades, the US lost its moral high ground.
Gura: Flavia says a British diplomat who spoke with Bloomberg put it succinctly.
Krause-Jackson: He sort of made this parallel that, you know, empires rise and fall. They don't suddenly collapse overnight. It's a long process. It's a managed process. And so I think the long view is that America is still a very important, potent superpower. But what it all comes down to is whether it will manage its decline in an elegant fashion or whether it will sort of go down in flames.
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