Nov 11 2020
How Will the US Election Affect Industries?
As the dust settles on one of the most unique elections in recent history, the two candidates’ (current President Donald Trump and President-elect Joe Biden) administrations have or will have different effects on various domestic industries. While the change in guards is expected to result in some substantial changes for the US economy, much remains in limbo, as the country awaits two run-off Senate elections in Georgia, which will determine control of the Senate. If Joe Biden enters office with a Republican-dominated Congress, significant changes are expected to be slow and contested. Still, there are notable differences in the two candidates’ policies and stances on big issues, which will likely have repercussions for a slew of industries.
Oil Drilling & Gas Extraction (IBISWorld report 21111)
Trump: Oil drilling and gas extraction has historically been a volatile industry. While this continued amid the Trump administration, the industry has experienced significant gains. Most notably, in 2019, the United States reported being a net exporter of petroleum for the first time recorded. Considering the Trump administration’s stance on fracking and reducing dependence on foreign sources of oil, this was expected to continue if he were reelected.
Biden: While the President-elect’s stance on oil and gas production has been murky, he made clear that he will not support new fracking and plans to decrease or eliminate subsidies for industry operators. Moreover, the Biden campaign touted plans to achieve 100.0% clean energy and zero emissions by 2050. While Biden has made no official announcements to decrease existing production, the industry is expected to experience moderate disruption amid shifting policy regarding domestic extraction and production.
Car & Automobile Manufacturing (33611a)
Trump: Similar to most manufacturing industries, the Car and Automobile Manufacturing industry has experienced volatile conditions during Trump’s presidency. The administration sought to bring manufacturing jobs back to the United States. However, the means were not always beneficial for industry operators. The ongoing and ever-escalating trade wars initiated by the Trump administration worked to bring domestic manufacturing stateside using threats rather than rewards. If elected for another term, this would have likely remained the same, with lower fuel-efficiency standards to attract automakers and threats of tariff hikes if outsourced.
Biden: Operators in the Car and Automobile Manufacturing industry are expected to experience various shifts with the new administration, with some perceived as positive changes and others that have resulted in skepticism from operators. For example, many expect tariff threats and trade disruptions to ease, and the President-elect has announced plans to create 1.0 million auto sector jobs during his term. However, Biden has made no secret of his plans to toughen fuel economy regulations, which Trump largely eased, and to incentivize electric cars, which may dishearten some industry operators.
Health & Medical Insurance (52411b)
Trump: The incumbent president has pledged to overturn Obamacare, but Republicans' attempt at a legislative package to do so in 2018 did not succeed. Trump’s administration is currently arguing to overturn the Affordable Care Act at the Supreme Court.
Biden: Although Biden has advocated for a public option for health insurance, which would potentially reduce revenue for health insurance providers, the likelihood of Republican control over the Senate during his first two years in office would make it difficult for this to be enacted into law.
Defense industries (33641a, 33641b, 33299b and 33299a)
Trump: Trump has overseen a significant increase in defense spending during his presidency. A large portion of this has come from the expiration of the sequestration included within the Budget Control Act of 2011, and defense spending was expected to plateau in subsequent years even if Trump won reelection.
Biden: While Biden may not seek the same large growth in defense spending similar to Trump, he has also not pledged large cuts. Furthermore, the Senate is likely to either have a Republican majority or a very slim Democratic one, which would make passage of a budget with significant cuts to defense spending unlikely to pass.
Internet Service Providers (51711d)
Trump: Under Trump, the Federal Communications Commission (FCC) rescinded net neutrality guidelines that the previous administration had put in place under the Open Internet Rule. The Open Internet Rule prevented telecom businesses from throttling or discriminating against any lawful content.
Biden: The President-elect signaled support for net neutrality and pledged to reinstate the Open Internet Rule put in place by the FCC during the Obama administration. However, Biden was not as vocal regarding net neutrality compared with other Democratic candidates, such as Bernie Sanders and Elizabeth Warren, which may lead him to take a lighter touch on the issue in office.
Correctional Facilities (56121)
Trump: From the outset, the Trump administration rescinded a guidance from the Obama administration to let federal contracts with private prisons expire. The administration has been generally supportive of the usage of private prisons, even as federal prison populations as a whole have declined.
Biden: The President-elect pledged to end the federal government’s usage of private prisons, in line with former President Obama’s policies. Biden has also pledged to end for-profit detention centers for migrants.
Trump: Often less considered in terms of presidential sway, US alcoholic beverage production has experienced detrimental international trade conditions amid the Trump presidency due to retaliatory tariff hikes from some of the United States’ major trading partners. If Trump were elected for another four years, the nationalistic approach his administration took with foreign trade negotiations likely would hinder this industry’s growth even further.
Biden: The President-elect has made no secret of his disdain for Trump’s trade war with China, which has largely been the catalyst for subsequent tariff hikes and retaliations from other trade partners. Over the next four years, as Biden walks back the former administration’s stance on foreign trade, alcoholic beverage producers, including operators in the Distilleries industry, are expected to experience increased exports, particularly domestic distillers of bourbon, a product which has been targeted by foreign tariff hikes.
Real Estate (53)
Trump: Many in the real estate, rental and leasing sector have displayed cautious optimism with Trump’s 2016 win due to the President’s history in the field. While the topic remained unpopular leading up to the election, Trump made no secret of wanting to privatize Fannie Mae and Freddie Mac, a move which many speculate could result in higher mortgage interest rates and fees, and deter future homebuyers. Conversely, during the Trump presidency, homeownership rates increased for the first time since 2004.
Biden: In February 2020, the President-elect announced a detailed housing plan, including a $640.0 billion investment over 10 years, aiming to enable more Americans to afford the cost of being a homeowner. Included in the plan are several forms of financial assistance, including a down payment tax credit of up to $15,000 for first-time home buyers. Still, detractors argue this move will be insufficient, as the United States contends with a sellers’ market, thus with many buyers and a dearth of affordable homes.
Trump: Even during Trump’s initial four years, substantial changes to regulations and legislation regarding banks took place in the first two years, when the GOP controlled the house and senate. To many, another four years of the Trump administration meant further deregulation and continued walkbacks on Obama-era consumer protections.
Biden: Biden may attempt to strengthen financial regulations and reverse legislation passed by the Republican-controlled senate that loosened some of the regulations in the Dodd-Frank bill. However, it may be difficult for him to pass this legislation with a Republican majority Senate, or even with a slim Democratic majority.
Medical & Recreational Marijuana (OD4141 and OD4142)
Trump: The Department of Justice under the Trump administration restored the ability of US attorneys to enforce federal prohibitions against marijuana in states that had legalized recreational use, reversing the previous administration’s policy. With another term, very few expected substantial changes in favor of marijuana legalization or decriminalization at the federal level.
Biden: The President-elect has not pledged support for legalizing marijuana at the federal level, but may choose to restore the Obama administration’s policy of not enforcing federal prohibitions in states that have legalized marijuana. In December 2020, the House of Representatives is set to vote on decriminalizing marijuana at the federal level. While this is before Biden is set to officially take office, the outcome of the vote is highly anticipated and has the potential to substantially change the United States’ stance on the substance, affecting how Biden may choose to address it moving forward.
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