Joe Biden is now the president-elect of the United States. The 2020 US presidential election matters not only for the American people and the country’s economy – the outcome of the vote will also have a significant impact on businesses across the Atlantic. The presidential election is particularly relevant to Europe via two core channels: foreign policy and trade.
Over the last four years, US-EU relations have deteriorated significantly under Trump’s administration. Some improvement is expected under Biden’s presidency as he believes in diplomacy and cooperation, which would allow further negotiations with regards to economic and climate policies and WTO reform. However, while Europe’s financial markets and economic prospects will be affected by Joe Biden’s economic policy, trends established by Donald Trump during his first term will still play a big role in US-EU relations.
US-EU relations may improve
Biden is calling for green investments as well as higher taxes on corporations and the rich while expanding tax credits for middle-class and lower-income Americans. Biden is also a proponent for increased social spending for health care and education as well as higher benefits during absences from work. Many of these policy goals may be impossible for Biden to accomplish if Republicans remain in control of the Senate. Biden also plans to help America’s position in the global economy by rebuilding strong ties with the European Union while working to address persistent imbalances in agricultural trade.
Biden intends to seek to end the “artificial trade war” with Europe. He criticized tariffs imposed by Trump, calling them a “self-inflicted wound” that has been affecting economic relations, costing jobs, and increasing costs for consumers. The possibility of Trump’s re-election triggered fear that Trump could start a trade war with Europe as he has previously threatened to do so. A trade war would be harmful to both the European and US economies.
Potential areas of trade tension – including aluminium and steel tariffs, data privacy, digital taxes and the dispute over Airbus and Boeing subsidies – could have escalated into a trade war that would include tariffs on European cars exported to the United States and a direct challenge to the Common Agricultural Policy. However, any hope that Trump’s protectionist policies may be reversed by Biden is premature. Analysts predict that Biden will focus on US national interests and US economic recovery first, and if there is a chance that resolving trade disputes would be detrimental, he might not do it.
Impact on Finnish businesses
Nonetheless, Biden’s intentions to return the US to the Paris Agreement, which aims to strengthen the global response to the threat of climate change, offer export opportunities in the renewable energy sector to EU countries like Finland. In Finland, the US represents the third largest market for Finnish exports, and it is Finland’s largest export market outside the EU. Growth in Finland’s cleantech sector and the development of renewable energy, specifically biomass, present collaboration and investment opportunities for US companies with innovative renewable energy technologies, processes, and equipment.
In addition, the health technology sector offers certain opportunities. Biden’s goal is to invest in technologies to make health services function efficiently and to reduce waste by utilizing modernized services. Finland’s already established companies and its vibrant start-up scene offer prospects for collaboration in healthcare technology platforms and e-health solutions.
The outcome of the election remains contested
In terms of US domestic financial and economic aspects, it is important to note that the impact that any president can have on the economy and market depends on their ability to enact legislation. To be able to ratify more controversial policies, control of both the House of Representatives (218 seats needed for majority) and the Senate (51 seats needed for majority) is necessary. Democrats once again won the majority in the House of Representatives but the Senate race looks to be close as of November 11, 2020.
Even though the election has been decided and Joe Biden has won the majority of electoral votes and defeated Donald Trump, Trump has made it clear that he is not going down without a fight. On November 4, 2020, despite incomplete results from several battleground states, the Trump campaign already filed lawsuits in Pennsylvania, Michigan and Georgia, laying the groundwork for contesting the state’s rules for election observers and mail-in ballots. A ruling on the validity of vote counting in various states may reach the US Supreme Court, where a 6-3 conservative majority could favour Donald Trump if the courts weigh in on a contested election. However, even if Trump is successful in his legal challenges, it is highly unlikely to affect enough votes to swing the outcome of the election.
Borenius’ lawyers are available to assist in addressing any questions you may have concerning any possible changes and their effects on your business.