With the election of Joe Biden as the new president of United States, the economic and political scenario on a global level changes. Let’s look at the three priorities of the President.
Over the last weekend it became official: with the conquest of 290 electors and 75 million votes, Joe Biden is the new President-elect of the United States. The ordeal that kept the world in suspense seems to be over, although Donald Trump still threatens war on every front to re-establish, according to him, the truth about the correctness of the electoral count.
For many, Trump’s moves may not go very far, consequently most, but not everyone, around the world is focusing on how the new President will be able to change the US economy and the world’s balance. Basically there are three big priorities for 77-year-old Joe Biden from Scranton, Pennsylvania.
Pandemic plan: an investment of 7.5 trillion dollars
Covid-19 has resulted in over 20 million unemployed workers in the United States and a poverty rate that hasn’t been seen for decades. So Joe Biden is already at work decongesting the US economy with a huge $ 7.5 trillion investment program to spread over 10 years. Of these, $2 trillion to be used immediately on infrastructure, clean energy, research and development, 5G, battery technologies and artificial intelligence.
To combat poverty, incentives for low incomes and for those who live in public housing will be inserted for $640 billion, $1.6 trillion will be provided for schools to the poorest and the minimum wage for workers will be raised to 15 dollars per hour. Obviously, the center of attention will be Healthcare, where Biden would like more assistance for everyone. For this reason, the new American administration plans to allocate $2.25 trillion for what will be called the Bidencare.
To cover this enormous amount of expenditure, is expected an increase in corporate taxes from 21% to 28%, increase taxation for those who exceed the income of $400 thousand per year, and higher tax on capital gains that exceed 1 million dollars. The plan should already be finalized by January 21, 2021, the first full day of work in the White House after the inauguration of President Joe Biden.
Green Economy: Restoring the Paris Agreement
Donald Trump’s last shot before his farewell to the White House was on November 4, with the official exit of the United States from the Paris Agreements to combat Climate Change. The outgoing President has concluded a long battle announced for the first time in 2017, as he has always considered this pact deleterious to the American economy and all to the advantage of China. Joe Biden’s goal now is to relaunch the alliance as an integral part of his grand $2 trillion project for climate change and thus for an increasingly greener world economy.
US-China: change of strategy to counter the rise of the Dragon
Joe Biden will move the front in United States ongoing fight with China. No more duties and direct clashes that penalized American companies, but an attempt to reform the World Trade Organization with new rules that Beijing will have to comply with. Also with regard to the fight against Coronavirus, the United States will look to reduce conflict with the rest of the world by immediately re-joining the World Health Organization.
On the Chinese side, the first effects of Biden’s election were seen on commodities. In fact, the futures on Chinese grown crops have suffered a decline, with the price of corn hitting the lows of the last 40 days and soy recording the largest decline in two weeks now. Investors’ expectations of a greater push for imports from the United States with the new US administration and therefore a reduction in demand for Chinese domestic crops are probably pushing prices down.
Biden election: market reactions
The equity markets have largely discounted the election of Joe Biden to the White House and have been set to rise for some days.
Investors, on the other hand, have positioned themselves short against the US dollar as they expect that, with the strong support of the Fed and the huge spending plan put in place by Biden, rates will remain low for a long time.
A newfound confidence in the markets made oil jump, with Brent exceeding 40 dollars a barrel. For the moment, greater political clarity and recent positive news on the vaccine front have overshadowed the big concern about the drop in demand caused by the still increasing coronavirus contagion across the globe.