Is John Key right about Donald Trump and Kamala Harris?

Saturday, 5 October 2024

ANALYSIS: Former prime minister John Key says a second Donald Trump presidency would be “better for the economy”.

He discussed his view on the upcoming US election, and his prediction - and hope - for a Trump victory in an extended interview with Stuff senior correspondent Samantha Hayes.

Does Sir John Key have a point?

Stuff has taken a look at some of his arguments, to see if there’s evidence to back up Key’s prediction and assessment of a second Trump presidency.

Key argued that Trump’s belief in market-based solutions and low taxes would lead to a stronger American economy, than if Kamala Harris becomes President.

“He's likely to embrace a bit more market. He's likely to have less red tape and he's certainly going to have lower taxes. So that bit is good,” Key said.

But Key also acknowledged that Trump was campaigning on an isolationist, anti-free-trade platform. That meant he did not think a Trump presidency would be good for New Zealand and other outside economies.

Let’s unpick those points Key gave to argue a Trump presidency would be good, economically:

“Embrace a bit more market”

Key said Trump had greater faith in market-led solutions, and would be less likely to push for Government intervention in business.

This is a debatable point.

Traditionally, the Republican Party has been more economically liberal. But things have changed over the past decade, and Trump - in particular - has not been a strong proponent of free markets.

For instance, the second policy on Trump’s website promises to introduce tariffs on imports from countries such as China and approach any free trade deal with caution.

“We cannot have free and open trade if some countries exploit the system,” says Trump’s policy pledge.

Key concedes that’s not a particularly free market attitude from Trump.

“Actually, China doesn't pay those tariffs, middle income consumers or consumers in America do,” Key said.

Harris, who Key says “isn't a great supporter of the marketplace solution”, is also not particularly pro-free trade.

“Vice President Harris will not tolerate unfair trade practices from China or any competitor that undermines American workers,” her campaign website says.

That means both US presidential candidates are campaigning to intervene in the free market.

One big point of difference between Trump and Harris is that she is campaigning on minimum wage changes. She says there should not be a “sub-minimum”, which exists in the US for workers that receive tips.

Harris also said she would increase the minimum wage, which has been $7.25 (USD) per hour for past 15 years. However, she did not say what it should increase to.

‘Red tape’

Key says Harris could stymie “the entrepreneurial capitalist culture that's driven the United States”.

Harris is campaigning against “big corporations” which she says have been “price gouging”.

She has also campaigned on meeting climate reduction targets. But she said her policies would lower the costs of energy, rather than increasing household costs.

Trump is campaigning to make the US “the number one producer of oil and natural gas”.

He is also blaming immigration for inflation, and is wanting to deport “undocumented immigrants” as a way to combat the cost of living.

Taxes

Tax is one issue where both candidates have clearly different policies.

Key says Trump’s tax policy is better.

“He certainly wants lower taxes,” Key said.

While he called Harris “a supporter of very significant increases in taxes'.

Harris is campaigning to increase corporate taxes, targeting companies with profits about $400,000 (USD) per year. She would then lower household taxes.

Her key campaign promise is to deliver tax cuts of up to $3000 per child as part of the Child Tax Credit. It would be higher, up to $6000, for children under five years old.

Trump wants to lower the corporate tax rate, down to about 15% - a major cut. It currently sits at 21%.