If anyone was in doubt about the key issue in the US presidential election, the opening 15 minutes of last night's debate between Donald Trump and Kamala Harris laid it bare.

Amid discontent in the US over the state of the economy, both candidates dished out blame for inflation and outlined some of their core economic policies.

Harris opened the debate by describing plans to "build up the middle class", something she repeatedly returned to. She revisited pledges she has signaled in her campaign, such as aid and tax relief for home buyers, childcare and small businesses.

Within seconds of speaking, Trump mentioned China, lauding the tariffs he leveled against Beijing during his first term and vowing to beef them up if re-elected.

He fiercely attacked the Biden administration for its economic record. "We've had a terrible economy," he said, claiming the inflation crisis was the "worst ever" in the country's history.

Inflation — the central issue?

Trump attempted to tap into possible voter nostalgia for the pre-Covid economy of 2019, when he was in office. "I created one of the greatest economies in the history of our country and we're going to do it again," he boasted.

However, Harris countered Trump's accusations that the Biden administration was to blame for the inflation crisis that struck much of the developed world in 2021 and 2022. "What we have done is clean up Donald Trump's mess," she said.

The state of the US economy and which candidate voters believe is better equipped to manage it is a crucial question in the 2024 election.

Polls show that a clear majority of Americans are unhappy with the economy; inflation in particular remains a dominant theme. A YouGov/The Economist poll in July found that the issue of price rises is by far the most important for US voters.

Inflation has been falling, and while it has been difficult to tame in 2024, some experts believe the issue remains potent due to the shock of its dramatic rise in the aftermath of the pandemic.

"It's one of these odd issues where I think public opinion has not caught up with economic reality," William Reinsch from the Center for Strategic and International Studies in Washington told DW ahead of the debate.

"The public is very concerned about inflation. All the indicators suggest that inflation is declining and has declined significantly. Not all prices, and certainly not all food prices, have gone down. But the public still seems to be in the mode of 'this is all terrible,' when objectively it isn't."

Adam Posen, president of the Peterson Institute for International Economics, says while "in some cosmic sense" it may be unfair that Harris is held responsible for past inflation, it's only to be expected. "If you're a president or you're part of the administration, you're always going to be judged by what the inflation and growth overall conditions are," he told DW.

Tax and trade

Posen says there are five key areas where the candidates' economic differences matter most — namely on taxation, tariffs, migration, regulation and the role of the Federal Reserve.

While Harris has pledged tax cuts for the middle class, Trump's tax cut promises are to extend the cuts he made for businesses when he was president in 2017.

"Harris seems to be much more focused on policies that will help the poor and the middle class," says Reinsch. "Trump's tax credits primarily benefit the wealthy."

Trump mentioned China several times during the debate. He has vowed to increase the tariffs introduced in his first term significantly but economists say those plans would see costs passed on to consumers.

"If Trump does what he says he wants to do and further restricts trade with China, it will be inflationary, it will be bad for productivity growth, it will distort all kinds of things and lead to blowback from around the world," says Posen.

However, the Biden administration largely carried on with Trump's protectionist trade policy and Harris, if elected, is likely to maintain existing tariffs.

"If Harris leaves in place the tariffs that already exist, which she would do unfortunately, and at least draws the line at no more general tariffs and limits it to tariffs on China, the damage is a fraction of what Trump would do," says Posen.

Immigration

On the topic of immigration, which Trump repeatedly returned to, Posen says there is a huge difference in how the candidates' approach would impact the economy.

He says Trump's plans to deport millions of migrants would be "stagflationary for the US" as the country's economy is so dependent on foreign labor. "It would probably cause a recession in select sectors of manufacturing, agriculture, hospitality, and retail, residential construction, while raising inflation significantly," he said.

While regulation did not feature heavily in the debate, Posen says Trump's plans to heavily deregulate sectors such as antitrust, compared with Harris' plans to intervene on price controls, point to sharp policy differences.

On the Federal Reserve, Posen says Trump has made clear that he would put more pressure on the US central bank to take certain actions on the dollar or on interest rates, whereas Harris has spoken of the importance of respecting the Federal Reserve's independence.

Both Reinsch and Posen say that the clearest evidence of the difference between the two candidates' visions for the economy can be seen in how their policies would impact the US budget deficit. 

Various models show that Trump's plans would increase the US federal government deficit by several trillion dollars over a decade, multiples of how much Harris' plans would increase it by.

The economy, stupid

While last night's debate moved on to issues such as abortion, the Israel-Hamas war and the war in Ukraine, the importance both candidates — Trump in particular — placed on the economy was clear.

Towards the end of the debate, during a discussion on race, Trump suddenly pivoted to focus on the Biden administration's economic record.

"They're destroying our economy, they have no idea what a good economy is," he said. "And remember this: She is Biden, she's trying to get away from Biden. The worst inflation we've ever had, a horrible economy."

Harris countered by returning to the policy plans she had outlined at the start of the debate. The moment was a stark illustration that Trump believes the economy is the issue he must focus on the most if he is to win back the presidency in November.

Edited by: Ashutosh Pandey