Election 2020: What Biden’s win means for business13 min read . Updated: 09 Nov 2020, 02:07 PM IST
- Joe Biden might bring big changes to some industries and renew relationships with U.S. allies
President-elect Joe Biden will step into the White House as U.S. companies are coping with the challenges posed by the coronavirus pandemic and adapting to new ways of doing business. Here is a look at how the incoming administration might shape key industries and issues over the next four years.
Mr. Biden has promised major changes for energy companies, though a Republican hold on the Senate, even a narrow one, could curb some of his biggest ambitions.
Mr. Biden will enter the White House with an aggressive climate agenda and has the power to use administrative agencies to follow through on several promises he has made for day one. Those actions include ordering the U.S. back into the Paris climate pact, withdrawing several Trump rollbacks that are now in legal limbo, starting negotiations for new climate rules on cars and trucks, and slowing or halting oil leasing on federal lands.
Harder to achieve under a split Congress will be the $2 trillion in spending Mr. Biden has proposed to kick-start dramatically reducing the country’s greenhouse-gas emissions. That plan calls for big improvements to the country’s electric-grid and mass-transit systems. Also needing congressional approval would be a Biden-backed package of financial incentives on renewable energy and efficiency aimed at meeting a goal of eliminating U.S. greenhouse-gas emissions by 2050.
Companies are planning for higher tax bills in a Biden administration, but could be delayed indefinitely should Republicans hold the Senate. Mr. Biden proposes keeping the bulk of Mr. Trump’s 2017 cuts for individual taxpayers making below $400,000, but has said he would seek to increase taxes on businesses and high-income households.
• Mr. Biden has proposed increasing the corporate tax rate to 28%, imposing a new minimum tax on U.S. companies and raising taxes on the foreign income of many U.S.-based multinational corporations, though a Republican Senate majority would likely block such a proposal.
• Like Mr. Trump, Mr. Biden has said he backs tax incentives that could encourage domestic manufacturing.
• Because tax policy passes through Congress, Mr. Biden might not accomplish much without full control of the House and Senate. A split Congress is likely to result in a stalemate on the biggest issues, leaving lawmakers to address expiring provisions or—as they have during the pandemic—using tax incentives and cuts to help businesses during a crisis. And Mr. Biden may try to act on tax-law enforcement and regulation through the Treasury Department.
A Biden administration could mean lots of change for the auto industry along with a sense of déjà vu, with many of the president-elect’s plans echoing the Obama-era playbook on electric vehicles and stricter auto-emission limits.
• Electric vehicles are key to Mr. Biden’s economic ambitions and pledge to create one million auto-sector jobs. His $2 trillion infrastructure plan calls for installing a half-million charging stations nationwide. Should it pass Congress, such support could be a boon for Tesla Inc., General Motors Co. and other car companies rushing to sell more battery-powered vehicles.
• Mr. Biden is expected to push for tougher fuel-economy regulations for auto makers and has said he plans to work with California and other states on aligning requirements for emissions, an effort that could bring more certainty for car executives trying to plan future models.
• On trade, Mr. Biden said he plans to focus on rebuilding relations with allies. That could benefit the industry with more stability and less rhetoric. Still, Mr. Biden plans to confront China on its trade policies, and leaders don’t expect a drastic shift in the new administration on that front.
Technology companies have often been at odds with the Trump administration, but a Biden White House holds its own risks, especially for the industry’s largest companies that have drawn increased scrutiny with their growing size and influence.
• On regulation, the biggest issue facing Big Tech, the Democratic president-elect and his congressional allies—as well as lawmakers across the aisle—have been vocal critics of industry titans’ power. Unlike his predecessor, who often claimed censorship of conservatives by the big social-media platforms, Mr. Biden has emphasized concerns about competitive practices, privacy and the treatment of gig workers.
• Mr. Biden isn’t expected to bring a truce in the costly battle between the U.S. and China for tech supremacy. Mr. Biden has stressed the need for China to play by international rules and echoed national-security concerns about the popular Chinese-owned social-media app TikTok.
• One area where tech companies could benefit from a Biden administration is immigration. The industry relies significantly on immigrant talent and is a beneficiary of the H-1B visa program for foreign professionals. Analysts say Mr. Biden is expected to maintain access to such visas.
—Sarah E. Needleman
The president-elect has promoted a collaborative approach on trade, wooing allies battered by Mr. Trump’s sanctions, rethinking the use of tariffs and working with other nations to create a united front to confront China.
Yet he inherits tariffs on roughly three-quarters of everything China sells to the U.S., plus a phase-one trade deal with ambitious Chinese purchase commitments that he would need to enforce.
• Advisers say Mr. Biden plans to consult with U.S. allies on a common approach toward China. That strategy makes it unclear whether he would keep tariffs or roll them back.
• Like President Trump, Mr. Biden views the rise of China’s tech companies as threats to their U.S. rivals and vehicles for espionage.
• Mr. Biden also would use tariffs, but for different ends, such as quotas on imports from nations that don’t meet climate targets.
Perhaps the biggest difference between a second Trump term and a Biden administration would be trade relations with U.S. allies. Mr. Biden’s advisers say his administration would consult with allies before acting on trade, especially when it comes to China.
• Mr. Biden has dangled the possibility that he would join a trade pact among 11 Pacific Rim nations, once called the Trans-Pacific Partnership, which Mr. Trump scrapped on his first working day in office.
—Bob Davis and Josh Zumbrun
A Biden administration is expected to boost federal involvement and spending on programs to develop domestic manufacturing. They anticipate only gradual easing, if any, of the trade restrictions and tariffs created during the Trump administration.
Executives and economists predict the Biden administration is likely to be reluctant to pursue free-trade agreements and other policies that could jeopardize blue-collar jobs in Midwestern states.
• “Biden will likely not be soft on China," said Mark Muro, a senior fellow in metropolitan policy at the Brookings Institution, a liberal-leaning think tank in Washington, D.C.
• Economists expect Mr. Biden to resuscitate federally funded institutes developed during the Obama administration for applied research in manufacturing and to push for Buy American requirements on federally funded projects and other incentives for manufacturers to invest in domestic production and product research.
• Mr. Biden’s election improves the chances that a long-anticipated infrastructure spending bill will be proposed as part of an economic stimulus program, though such a bill might have to be smaller and less ambitious to win approval in a divided Congress.
Mr. Biden’s win raises fresh question marks for the U.S. farm sector after years of trade turbulence under Mr. Trump.
• The former vice president has outlined a measured approach to trade negotiations that could ease the market swings that have at times battered farmers over the past three years. Tariffs on U.S. farm goods hit crop and livestock prices for farmers, and led the Trump administration to pay out tens of billions in government aid.
• One big question is whether aid payments will continue at their current pace or if the Biden administration will throttle back. The record-high government payments have helped keep some farmers afloat, though Mr. Biden has pointed out the aid comes at a cost to taxpayers.
• Some farmers are girding for a return to more aggressive regulation, like the Obama-era Waters of the United States rule that other farmers worried would expand federal oversight into their drainage ditches and rain-formed ponds.
• Mr. Biden, whose campaign positioned climate change as a central threat to the nation, has said farmers have a part to play in the climate fight. The president-elect’s rural platform has called for expanding an Agriculture Department conservation program to pay farmers for adopting environmentally friendly practices, such as capturing carbon in soil by keeping fields covered with vegetation during non-growing seasons. Some of Mr. Biden’s efforts could be tempered by a continued divide on Capitol Hill.
The financial industry is girding for a Biden victory to bring heightened regulation, but not all at once.
An early area of focus is likely to be the Consumer Financial Protection Bureau. The Biden administration is expected to ramp up the watchdog’s enforcement activities, especially around payday lenders and debt collectors, analysts say.
The CFPB is an area where Mr. Biden can make changes immediately, because the Supreme Court ruled this year that presidents can fire the agency’s director at will. Mr. Biden can and likely will install new leadership early on.
Banks expect all manner of customer fees to come under the microscope. They have allowed many borrowers to skip payments on cards and personal loans during the coronavirus pandemic, and now they are debating how to deal with those customers in the months to come. The Biden team views protecting those borrowers as a CFPB priority, The Wall Street Journal previously reported.
Mr. Biden won’t be able to put his mark on some other financial regulations for a while. Federal Reserve Chairman Jerome Powell’s term expires in February 2022, while Federal Deposit Insurance Corp. Chairman Jelena McWilliams’s term ends in June 2023.
A tough-on-banks Biden administration could hit one lender in particular: Wells Fargo & Co., which has been operating under a Fed-imposed cap on its growth since 2018. Cowen Washington Research Group analyst Jaret Seiberg in October predicted that a Biden administration would keep the bank under the cap until 2023.
Pharmaceutical companies are bracing for renewed efforts by Mr. Biden to lower the costs of prescription drugs, including giving the federal government more say in what it pays for the medicines, according to analysts and economists, which could hurt industry sales.
Yet large pharmaceutical companies don’t anticipate Democratic policy proposals to pose greater threats to their profit models than those of Mr. Trump, who moved to increase the importing of drugs from abroad and peg prices Medicare pays for unspecified drugs to the rates other countries pay.
If the Senate remains GOP-controlled, or is split between parties, major drug-pricing legislation will be difficult to achieve by Mr. Biden and Democrats, analysts say.
President-elect Biden will likely seek to advance Covid-19 relief and expand health-insurance coverage, which would mean more government purchases of prescription drugs and therefore higher sales, said Neal Masia, an economist and consultant with Guggenheim Securities LLC. Mr. Biden’s changes to the Affordable Care Act would also drive more prescriptions, said Mr. Masia.
Most of Mr. Biden’s proposals draw from the Democratic playbook for curbing drug prices. One would set up an independent government board to determine prices paid by most government purchasing programs, including Medicare.
Mr. Biden has also proposed the government directly negotiate with drugmakers for discounts on medications, which Medicare can’t do under current law.
—Jared S. Hopkins
Health Insurers and Hospitals
A Biden administration is widely expected to expand the federal government’s role in the response to the pandemic, which could create short-term challenges for insurers, who have rolled up big profits this year with a drop-off in many typical medical procedures.
• Mr. Biden might ask insurers to pick up the tab for expanded testing, or eliminate out-of-pocket costs for Covid-19 treatment.
• Insurers have long opposed a Medicare-like public option for coverage, an idea Mr. Biden has supported during his candidacy.
• Expanded coverage, whether through Medicare, Medicaid or the Affordable Care Act’s exchanges, would likely mean more people enrolled with insurers, which now play central roles in all three forms of government coverage. The ACA has overall benefited the industry, expanding its rolls and revenue. Should Republicans maintain hold on the Senate, Mr. Biden is unlikely to pass any major changes that expand coverage, but his administration could make regulatory moves that bolster enrollment in existing programs.
Under a Biden administration, hospitals could see a welcome increase in patients covered by health insurance, though health policy experts say expanded coverage would also come at a price.
• Mr. Biden’s proposal to expand Medicare to Americans starting at age 60 would likely shift some patients from well-paying private insurance to Medicare, which typically pays hospitals less. That policy would require skilled negotiation between the White House and a Republican Senate, said Stephanie Kennan, senior vice president of federal public affairs for McGuireWoods Consulting LLC.
—Anna Wilde Mathews and Melanie Evans
With climate and labor issues expected to be high on the Biden agenda, retailers might be facing higher costs. Yet looming larger for big retailers such as Macy’s Inc. and Gap Inc. are trade policy and tariffs, which have disrupted the industry’s supply chains during Mr. Trump’s term in office.
On the campaign trail, Mr. Biden has said he is open to signing multilateral trade agreements. But tariffs aren’t likely to disappear, according to retail trade groups. “Biden will strike a more constructive tone on trade, but in effect he won’t be that dissimilar to Trump," said David French, head of government relations for the National Retail Federation.
On workforce issues, many large retailers have been raising starting hourly wages in recent years, but increasing the federal minimum to $15 an hour, as Mr. Biden suggests, would add costs for some large chains and many smaller retailers. Industry observers also expect Mr. Biden to push changes such as an act that grants more protections to unionized workers, including prohibiting employers from discriminating against those who participate in strikes.
The Biden administration will likely seek to reinstate and expand Obama administration measures aimed at improving workforce diversity, including tracking pay inequities across businesses.
Mr. Biden’s campaign has said he plans to address wage inequities between Black and white workers, diversify leadership at federal agencies, and make it easier for workers to pursue claims for harassment and discrimination. He has also said he would double funding for the Equal Employment Opportunity Commission and continue the Obama administration’s efforts to collect data on earnings gaps by race and gender.
Mr. Biden is also expected to rescind a Trump executive order that places limits on racial-sensitivity training, which would allow government agencies and companies with federal contracts to freely discuss topics such as white privilege and systemic racism.
Employment lawyers say the government agency that oversees federal contractors, which under Mr. Trump has been tasked with reviewing the training and investigating companies for their diversity pledges, will likely focus more on enforcing affirmative-action programs if Mr. Biden wins.
With scores of small businesses closing this year, Mr. Biden has said aid to U.S. small businesses still struggling amid the coronavirus pandemic is a priority.
• He has called for changes in the Paycheck Protection Program, including strengthened oversight and a guarantee that every eligible business with 50 employees or fewer would get relief.
• On pandemic-related business shutdowns, Mr. Biden has said a stronger federal plan to control the public health crisis would benefit businesses.
• Mr. Biden’s platform proposes expanding small businesses’ access to capital through a new fund which would receive $30 billion in initial federal funding and make investments, including directing $10 billion to state and local programs that provide venture capital.
Mr. Biden has also said he would give the Minority Business Development Agency, housed under the Commerce Department, $5 billion in annual lending and investment authority, a move intended to improve federal contracting and other opportunities for minority-owned businesses.
This story has been published from a wire agency feed without modifications to the text