How can the presidential elections in the U.S. affect the tech industry?

By Brunno Boaventura Ribeiro

The 2024 U.S. presidential election, featuring Kamala Harris and Donald Trump, will certainly bring significant implications for the tech industry. With both candidates holding contrasting views on regulation, taxation, trade, and innovation, the outcome could shape the sector's trajectory for years to come.

Therefore, this article gathers the potential impacts of the upcoming U.S. presidential election on the tech industry, drawing insights from recent publications by Economist Intelligence and Investor's Business Daily.?

With Kamala Harris running against Donald Trump, the policies of each candidate could significantly influence the sector that has been a driving force behind recent economic gains.

As the election approaches, the tech industry is bracing for changes that could come with a Harris or Trump presidency. The policies of each candidate may either reinforce or challenge the progress made by technology companies in recent years.?

From Artificial Intelligence (AI) regulation to semiconductor export controls, and from impact on talent and immigration policies to corporate taxation and legislative challenges, the stakes are high for an industry that thrives on innovation and global collaboration.?

With Democrats emphasising consumer protection and competition, and Republicans advocating for tax cuts and a more unilateral trade approach, the tech sector finds itself at a crossroads.

Let’s further explore each of these critical areas in detail:

AI Regulation and Antitrust Issues

AI has become a pivotal focus in the tech sector, with companies like Nvidia seeing substantial growth due to advancements in generative AI. However, the future of AI regulation hinges on the election outcome.?

A Democratic administration is likely to advocate for stricter regulations, potentially using antitrust actions to keep tech giants in check. This could result in more robust oversight from the Federal Trade Commission (FTC) and the Department of Justice (DoJ), possibly containing some of the rapid innovation seen in recent years.

In contrast, a Republican administration might adopt a lighter regulatory touch, especially in AI. Even Though Donald Trump has labelled AI as "dangerous and scary," his administration is expected to avoid rigorous regulations.?

Instead, Trump might focus on rolling back existing regulations, giving tech companies more space to develop and deploy AI technologies without significant government intervention.

Trade, Tariffs, and International Relations

The tech industry’s reliance on global supply chains, particularly for semiconductors and other critical components, makes it highly sensitive to international trade policies.?

Under a Harris administration, the U.S. is likely to maintain its current position with China, continuing export restrictions on advanced technologies to prevent China from closing the gap in critical sectors like AI and semiconductors. This approach would involve working closely with allies to enforce a multilateral framework.

On the other hand, a Trump presidency could lead to a more unilateral and transactional approach to trade. Trump's proposed 10% tariff on all imports could escalate tensions with both allies and adversaries, potentially disrupting global supply chains.?

U.S. tech companies that manufacture products overseas, such as Apple, Microsoft, Dell, HP and many others, could face escalated production costs, which might ultimately be passed on to consumers.

Impact on Talent and Immigration Policies

The tech industry relies heavily on skilled labour, much of which comes from abroad. Kamala Harris is expected to support policies that facilitate the entry of skilled workers, particularly through programs like the H-1B visa.?

This type of permit allows U.S. companies to employ foreign workers in specialty occupations that require theoretical or technical expertise in fields such as IT, finance, engineering, science, and medicine.?

The H-1B visa is particularly significant for the U.S. tech industry, which relies heavily on highly skilled talent from around the world. This program would help tech companies maintain their competitive edge by ensuring access to top global talent.

Conversely, Trump’s stricter immigration stance, particularly targeting the H-1B visa program, could exacerbate labour shortages in the tech industry. Restricting the influx of skilled workers would make it more difficult for companies to fill key positions, potentially slowing innovation and growth.

Corporate Taxation and Legislative Challenges

Tax policy is another area where the two candidates diverge. Harris has proposed raising the corporate tax rate to 28% and imposing a 25% tax on unrealized capital gains for the wealthy. These measures could affect tech founders and investors, potentially leading to reduced investments in startups and innovative projects.

Trump, however, is likely to push for further tax cuts, including a reduction in corporate tax rates. This approach could stimulate increased investment in the tech sector, as lower taxes generally lead to higher profits and more capital available for research and development.

Regardless of who wins the presidency, a divided Congress is expected to pose significant challenges to passing new legislation. This impasse may limit the ability of either administration to perform major changes in tech policy, leaving much of the regulatory burden to executive orders and state-level actions.

A Crucial Turning Point for the Tech Industry's Future

The 2024 U.S. presidential election will have profound implications for the tech industry. While Democrats and Republicans offer different visions for the future, the industry's fate will likely depend on how these policies are implemented and the degree to which Congress can pass meaningful legislation.?

The election outcome will not only shape domestic policy but also influence the global standing of the U.S. tech sector in an increasingly competitive landscape. As the world watches closely, the direction taken by the next administration could either reinforce the U.S.'s leadership in technology or signal a shift in the global balance of innovation power.