Christopher Alkan
How could the outcome of the November election for US president affect businesses?
US politicians seem to be in permanent campaign mode. But now, the race for the White House has started in earnest.
While the Democratic and Republican party conventions only take place in July, US President Joe Biden and former president Donald Trump are virtually assured of being nominated, barring any upset in the myriad legal proceedings that Trump currently faces.
That sets the US up for a repeat of the 2020 contest, the first presidential rematch since 1956.
As always, business executives around the nation will be asking what the outcome might mean for them. History suggests answering this question is far from straightforward.
A recent analysis from Bloomberg showed that clean-energy stocks lagged the S&P 500 in the year after Joe Biden won the 2020 race – despite his enthusiasm for green energy.
Predictions that his presidency would spell disaster for oil and gas drillers have proved equally wide of the mark, with US crude output hitting a record high. This is no aberration.
America’s top defence stocks trailed the broader market in the year after Donald Trump’s 2016 win, despite the Republican enthusiasm for national-security spending.
Regulatory implications
So what could be the main implications of a win by the Republicans or Democrats?
It makes sense to start with the areas where presidents have most sway.
Even without a majority in Congress, Biden or Trump would enjoy considerable discretion in business regulation and trade.
Starting with regulation, Biden has already indicated he would use a second term to impose stricter controls on companies, with the potential to add headwinds for the energy, healthcare and financial services sectors. Most recently Biden has indicated his desire to bring down drug prices.
He has also taken an increasingly dim view of business concentration and potentially abusive practices.
Under his presidency, US authorities have been investigating a wide range of possible malpractice by companies such as Apple, Visa and concert promoter Live Nation.
Biden has also been more resistant to mergers and acquisitions that have the risk of creating companies with excessive market power.
For example, authorities are investigating the roughly US$10 billion acquisition of sandwich chain Subway by private equity firm Roark Capital, which already owns rivals Jimmy John’s and Arby’s. While this policy slant from Biden might be expected to be unpopular with businesses, executives at smaller and mid-sized firms could benefit from tighter controls on larger competitors.
Energy focus
Trump’s policies on these issues are pretty much the opposite of Biden’s, with the former president promising lighter-touch regulation.
He is also likely to take a more permissive approach to corporate tie-ups. Notably, Trump has focused especially on the energy sector, where he has said he wants the US to "Drill, baby, drill."
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