A United States Perspective
On November 7, the major media networks called the 2020 election, announcing that Joe Biden had been elected 46th President of the United States. Although Donald Trump continues to pursue legal challenges, his pathway to claiming the 270 electoral votes needed to win appears to be tenuous at best. Accordingly, most people have moved on with a presumption that Joe Biden is the President-elect.
There are winners and losers in any change in the White House. Below we comment on the potential implications of a Biden administration on various industry sectors. Our analysis and supporting commentary are based largely on our review of the Biden campaign’s policy statements. We identify possible winners and possible losers, presuming there will be a Republican-controlled Senate. Divided government limits significantly what the new administration can get through Congress.
This summary will require revision if the Democrats win both Georgia Senate seats in the January 5, 2021, runoff. That would leave the Senate at 50 seats apiece, giving Vice President-elect Kamala Harris the tiebreaking vote.
For more detailed insights, read our Flash Report, “The Biden Administration: The First 100 Days and Winners and Losers.”
- Consumer Products
- Oil and Gas
- Banking and Capital Markets
An expected fresh round of stimulus to put money in people’s pockets and help them cope with the effects of COVID-19 on their lives would certainly help consumers. So would the Biden administration’s efforts to end the pandemic and revive the economy. The President-elect’s promise to “follow the science” has left “brick and mortar” retailers fearing the specter of another prolonged lockdown without rent cessation. Regarding the timing of stimulus relief, the results of the Senate runoffs in Georgia may be an inflection point. If the Republicans retain control of the Senate, as expected, reality may set in and the House may be willing to agree to at least an initial stimulus package. The political dynamics change significantly once the transition to a Biden presidency takes place.
With respect to trade policy, Biden will have authority to negotiate policy revisions and unilaterally reduce or eliminate tariffs or apply new tariffs. While favorable impacts on trade are expected to benefit retailers, trade policy may not prove to be a key component of the Biden economic plan. Industry proponents hoping to turn back the clock on China and reduce uncertainty about tariffs and international trade are likely set up for disappointment. The President-elect noted during the campaign that his approach with China and trade in general will be a multilateral one working closely with U.S. allies. In the United States, negative views of China have increased significantly, limiting Biden’s options.
So, as the song goes, “Two out of three ain’t bad!” Consumer products and retail sectors can expect a strong and an immediate focus on the pandemic and the economy. But they will likely not see an unraveling of Trump’s tariffs on various imported Chinese and European goods any time soon. They can expect a review of tariff policy over time, with adjustments made from time to time. As the Biden administration is committed to free but fair trade, reforming the World Trade Organization with new rules against subsidies and other unfair market practices may be a possible play. That, too, will take time.
The Biden presidency will be encouraging people to “Buy American,” which could impact how retailers source their products. In addition, Biden campaigned on a platform supporting a minimum wage hike to $15 an hour and raising taxes on corporations, both of which would hurt retailers and consumer products companies on the top and bottom lines.
Other developments that could occur during the Biden presidency include the increasing importance of environmental, social and governance (ESG) issues and overall social responsibility. In the United States, sustainability reporting is voluntary and not driven by corporations. By contrast, there are strict regulations in Europe. It is possible a Biden administration could apply pressure on this front by forcing transparency in public reporting. Transparency leads to peer comparisons, which lead to pressure for improvements that can affect supply chains and logistics.
 “Unfavorable Views of China Reach Historic Highs in Many Countries,” Laura Silver, Kat Devlin and Christine Huang, Pew Research Center, October 6, 2020: www.pewresearch.org/global/2020/10/06/unfavorable-views-of-china-reach-historic-highs-in-many-countries/.
The President-elect has included a number of Big Tech advisors on his team. The technology industry has not been a fan of Trump’s trade war against China. However, technology-friendly trade may continue to be a thing of the past, as the Biden administration is far more likely to hold China accountable for its human rights abuses than the predecessor administration. But the tone of a Biden presidency toward China is likely to be markedly different through a multilateral approach, so trade relations with China remain an open question at this point.
The technology industry has long championed an expanded H-1B Visa program to enable access to highly skilled workers not available in the United States in the volume required. The Trump administration has made it difficult for U.S. companies to hire foreign workers for jobs that could be done by American workers with comparable skillsets. A Biden administration is likely to reform the H-1B system and work toward eliminating limitations on the number of green cards the government issues each year.
Social media content has become a lightning rod for both political parties and for different reasons. Some efforts toward moderation may happen in the first 12 months, but the approach will be interesting. Content moderation, algorithmic transparency, data privacy and disinformation issues will likely be placed on the table by the new administration and the Democrats, with Republicans focused on censorship concerns.
On the technology antitrust front, the House Antitrust Subcommittee has issued a report on alleged anticompetitive practices of Alphabet, Amazon, Apple and Facebook. The committee is expected to propose legislation to overhaul U.S. antitrust laws. Assuming the bill is supported by the new administration, the question arises as to how far it will get with a Republican Senate majority. President-elect Biden has said it's too early to talk about breaking up companies and instead has leaned toward regulation as a way to curb their power and influence.
Biden has been an outspoken critic of Section 230, which protects Google, Facebook, Twitter and other technology giants from lawsuits over the content their users post on their platforms. Section 230 also has few supporters on Capitol Hill, so some bipartisan legislation may be possible. With respect to research, the Biden administration will likely continue the Trump administration’s emphasis on artificial intelligence (AI) research and quantum computing, but not at the expense of research in other areas.
 “Biden has packed his staff with Big Tech execs to help manage the transfer from Trump — But Facebook, Google, and Apple Are Notably Absent,” Isobel Asher Hamilton, Business Insider, November 11, 2020: www.businessinsider.com/biden-transition-team-big-tech-execs-facebook-google-apple-twitter-2020-11.
 “What Big Tech has to gain – and lose – from a Biden presidency,” Mark Sullivan, Fast Company, November 3, 2020: www.fastcompany.com/90571308/2020-election-big-tech-apple-amazon-google-biden.
 “Biden beats Trump: Here's what it means for tech,” Marguerite Reardon, c|net, November 7, 2020: www.cnet.com/news/biden-beats-trump-heres-what-it-means-for-tech/.
Under Trump’s administration, the Republican-led Federal Communications Commission (FCC) eliminated its authority to impose net neutrality rules. A Biden FCC is expected to reverse this decision by classifying broadband as a Title II telecommunications service and restoring the agency's authority to regulate internet service and its ability to impose net neutrality protections.
According to the FCC, over 20 million Americans don’t have access to quality broadband internet, with some estimating an even higher number, perhaps even double, because infrastructure isn’t in place and the cost is too high – especially in rural areas. Given the importance of broadband connectivity to virtually every aspect of modern life, the new administration will likely consider adding a “broadband for all”-type program to help reduce the digital divide existing in the United States between large urban and rural areas. This issue has become more acute as children have been required to take classes from home.
 “Update: What Biden's presidency could mean for tech and telecom,” Casey Egan, S&P Global Market Intelligence, November 9, 2020: www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/update-what-biden-s-presidency-could-mean-for-tech-and-telecom-61062763.
 “Give everybody the internet,” Emily Stewart, Vox, September 10, 2020: www.vox.com/recode/2020/9/10/21426810/internet-access-covid-19-chattanooga-municipal-broadband-fcc.
 “Biden not planning defense cuts, but they may come anyway,” Joe Gould, Defense News, September 11, 2020: www.defensenews.com/congress/2020/09/11/biden-not-planning-defense-cuts-but-they-may-come-anyway/.
Oil and Gas
The market has already dictated many of the things that Democrats favor, as investor dollars have moved away swiftly from the industry in the face of poor market sentiment due to outsized spending relative to cash flow expectations and ESG performance concerns. Pre-COVID-19, oil and gas companies had already decreased their capital budgets in attempts to operate within cash flows to attract more outside capital. ESG-related metrics have also continued to elevate in importance in the boardroom and C-suite given the increased focus from large institutional investors, as this industry has been viewed by the public as irresponsible to the environment. To top it off, industry consolidation has been viewed as imminent over the last several years, and that trend has not only recently come to life but is expected to intensify given the demand destruction and overall impact of the pandemic.
With that context, the Biden administration is expected to increase regulatory oversight of the industry. Obtaining permits for new pipeline projects will likely be more difficult and drilling on federal lands is expected to cease. Given Biden’s promise to rejoin the Paris Agreement, some expect the administration to cap U.S. output within an 11 to 11.5 million barrels a day range. Some additional expected actions include:
- Requiring aggressive methane pollution limits for new and existing oil and gas operations (a pledged day-one executive order).
- Demanding a worldwide ban on fossil fuel subsidies.
- Pursuing a global moratorium on offshore drilling in the Arctic and reestablishing climate change as a priority for the Arctic Council.
The irony is that the additional emissions-related policies can actually be viewed as a positive to the industry, because the general public perception is that the Trump administration’s cuts on emissions regulations and withdrawal from the Paris Agreement allowed the industry to do whatever it wanted. But that hasn’t been the case, as the industry has already been making significant investments in new technologies to decrease and capture GHG and altering drilling programs to decrease emissions from flaring associated gas. Accordingly, the public sentiment and resulting investor confidence in the industry can possibly increase under stricter policies that promote the belief that organizations producing under more stringent standards are cleaner operators. In essence, industry players receive a social license to operate.
As the Biden administration policies reduce domestic production, it will be interesting to observe foreign policy developments with respect to dealing with the Trump administration’s sanctions on Iranian and Venezuelan production exports. A pro-Iran policy could result in reduced U.S. influence with OPEC and Saudi Arabia. All of these developments serve as an accelerant of the industry’s response to market forces, regardless of whether the Republicans retain the Senate. So as the industry undergoes significant change, President Biden will have to determine just what he can get the Senate to agree to. Given the market has already clamped down on the industry and is pushing an ESG focus, it might temper what the new administration actually needs to put in place.
 “Oil Industry Consolidation Heats Up As Jobs Disappear,” David Blackmon, Forbes, October 5, 2020: www.forbes.com/sites/davidblackmon/2020/10/05/two-new-reports-oil-industry-mergers-heat-up-as-jobs-disappear/?sh=3f85be5a3223.
 “Potential Impacts On Oil Industry Of A Biden Administration,” Dan Eberhart, Forbes, October 15, 2020: www.forbes.com/sites/daneberhart/2020/10/15/potential-impacts-on-oil-industry-of-a-biden-administration/?sh=23b4e9a910ee.
The airline industry will certainly gain once the pandemic is under control. The sooner that happens, the sooner its road to recovery becomes clearer. While there has been and continues to be significant political gridlock on the size of the next phase of stimulus, there is significant bipartisan support for additional airline relief. Airline payroll support has not gotten traction as a separate piece of legislation, despite the massive furloughs across the industry, as the House has been holding out for a “big splash” stimulus bill, which is unlikely to happen with a Republican-controlled Senate.
Another dynamic which could influence the timing of airline relief is the need for wide body aircraft for vaccine transport. Those aircraft are currently parked and sufficient lead time is required to pull the workforce off furlough and place the aircraft in service. With that background, there may yet be added incentive and pressure to approve more funding to make more aircraft available.
With aviation accounting for nearly 2% of GHG emissions, the Biden administration is expected to target these emissions by incentivizing the creation of sustainable fuels for aircraft and fostering such measures as air traffic pattern management. The Biden administration is also expected to mandate wearing of masks for commercial flights, reinforcing what the airlines are doing anyway.
 “COVID-19 Vaccine Delivery Will Present Tough Challenge to Cargo Airlines,” Doug Cameron, The Wall Street Journal, October 5, 2020: www.wsj.com/articles/covid-19-vaccine-delivery-will-present-tough-challenge-to-cargo-airlines-11601890203.
See comments below under “Industrials,” as they apply also to the automotive industry. In addition, Biden’s administration will restore the electric vehicle tax credit to incentivize the purchase of these vehicles, targeting middle class consumers and vehicles made in America. These tax credits for electric vehicles would not only help newer OEMs like Tesla, Lucid and Nikola, but also traditional OEMs like GM, Ford and Volkswagen, all of which are investing billions in alternate fuel vehicles.
To address a major obstacle to more expansive deployment of electric vehicles, the new administration intends to work with states and cities to deploy more than 500,000 new public charging outlets by 2030. A new fuel economy standard will be set that goes beyond what the Obama administration had in place. Potentially tougher emissions standards on traditional gas-burning vehicles presents a downside for the industry.
 “Factbox: What impact would a Biden presidency have on the auto industry?,” Tina Bellon and Paul Lienart, Reuters, October 30, 2020: www.reuters.com/article/us-usa-election-autos-biden-factbox/factbox-what-impact-would-a-biden-presidency-have-on-the-auto-industry-idUSKBN27F2EX.
Banking and Capital Markets
Without Democratic control of the Senate, the most significant impacts to the financial services industry may well result from a shift in priorities on the part of new supervisory leaders, rather than the kinds of significant legislative changes that stemmed from other elections in the past. While it is likely to take some time to replace all key personnel within affected agencies, expectations are that the Secretary of the Treasury, the Comptroller of the Currency, and the director of the Consumer Financial Protection Bureau (CFPB) will be the first to be replaced. Many observers have noted that the members of President-elect Biden’s transition team who are focused on financial services matters have a track record that, at least on certain key topics, has been unfavorable to the industry. Even absent new rules, the sector could see significant negative impacts just as a result of the likely more aggressive supervisory positions new agency leaders can take.
Therefore, a Biden presidency portends a more challenging regulatory environment for financial services than a second Trump term would have. However, the worst possible scenario for the industry is made a lot less likely if the Republicans succeed in hanging on to the Senate. If the Democrats were to flip both Senate seats in Georgia, we’re likely to see a reversal of the Trump tax cuts that had an outsize benefit for financial institutions compared to other industries. There may even be renewed calls to break up the big banks, although an action this dramatic seems less likely to succeed given the razor-thin margins the Democrats would hold in the Senate in that event.
Trump era enforcement priorities including anti-money laundering, sanctions, market and consumer abuse, internal controls, and cybersecurity are likely to continue. Consumer protection and securities market manipulation will also be high priorities of the Biden administration. The new administration’s views on innovation appear mixed and include reports that it may be willing to advance policies related to cryptocurrency at the same time it looks to roll back the Office of the Comptroller of the Currency’s recent redefinition of banking. The new administration is also expected to invest more in AI, but for financial services the use of AI will be carefully considered against the potential consumer impact.
No doubt, the new administration’s top priority on the healthcare front will be containing the spread of COVID-19, with an emphasis on letting science play more of a central role in setting policy, developing and delivering vaccines, and preparing for future pandemics. Since the pandemic began, Democrats have been highly critical of the COVID-19 data collection process implemented by the Trump administration. The new administration is expected to centralize these systems for use by the Centers for Disease Control and Prevention (CDC) and Centers for Medicare & Medicaid Services (CMS).
The Biden administration will protect the ACA and resist attempts by the progressive left to adopt a government-funded single payer program that would scrap private health insurance. The administration plans to build on the ACA by giving Americans more choice through a public health insurance option similar to Medicare that would be available on the ACA insurance exchanges and an expansion of eligibility for Medicare and Medicaid recipients (e.g., reduce the enrollment age for Medicare from 65 to 60). In addition, there may be efforts to support taxpayer-funded abortions and make healthcare options more readily available for immigrants. Senate Republicans are expected to resist these plans. However, there will likely be bipartisan support to cease surprise medical billings, particularly from out-of-network providers.
The new administration is unlikely to stem the trend over recent months toward compressing global supply chains through reshoring and near-shoring, with an objective of reducing dependence on other countries for critical materials and components in future crises. The last two elections have been won and lost in the rust belt states, and failure to bolster and strengthen American manufacturing and innovation could impact the presidential election in this region yet again in 2024. The Biden campaign dismissed Trump’s “Made in America” mantra – largely because foreign investment has outpaced domestic investment and American manufacturing exports have declined – and embraced its own mantra, “Made in All of America.” Accordingly, the new administration is expected to support policies that will build a strong industrial base and small-business-led supply chains that will retain and create millions of jobs across the country.
These policies will encourage investing in manufacturing and technology to make in America many products currently being imported from abroad. Industrial revitalization will be driven by taxpayer-funded government procurement of American products to support American jobs, reduced dependence on China, tightening up “Made in America” advertising, and multilateral efforts with allies to address trade abuses that put American products at a disadvantage. An important part of this effort will be to enact legislation that would increase worker bargaining power to drive up wages and secure stronger benefits.
The President-elect also promised during the campaign to enact a national strategy around developing a low-carbon manufacturing sector in every state with accelerating cutting-edge technologies and reskilled/upskilled workers. The plan would make available tax credits and subsidies to businesses to upgrade equipment and processes, invest in new or expanded facilities, and deploy low-carbon technologies. How this would be funded and the extent of support from a Republican Senate majority remains to be seen.
Market forces are already driving power companies to use renewables and cheap natural gas for electricity generation, as coal falls out of favor amid sluggish demand and current emissions regulations. The new administration’s energy platform calls for the United States to reach net zero carbon emissions by 2050. But the majority of U.S. utilities have already made this pledge. Any efforts to accelerate decarbonization of power generation will likely consider the importance of reliability, as recurring massive blackouts will lose the confidence of the electorate – and that means lost votes. It is expected that the administration will limit natural gas production by restricting drilling on federal land. It will also evaluate issues affecting the future of nuclear energy as a viable low- and zero-carbon energy alternative, including cost, safety and waste disposal systems.
Utilities that have embraced a swifter transition to renewables will continue to reap rewards in the market under the Biden administration, while those that have not yet started the transition or are further away from their end goals might be strategically disadvantaged should there be an externally driven push to accelerate their progress.
 “What a Biden Presidency Could Mean for Utilities,” Charles Fishman, Morningstar, October 16, 2020: www.morningstar.com/articles/1004692/what-a-biden-presidency-could-mean-for-utilities.