What we learned at the presidential debate

The final US presidential election debate was dramatically different from the first debate, in that the candidates actually discussed policy. As expected, there were stark differences between the two candidates on a variety of issues. Executives therefore should be preparing for divergent business environments in the US next year. Because despite most polls showing Democratic nominee Joe Biden with a sizeable lead over President Donald Trump, 2016 taught us that opinion polls do not necessarily predict election results. So what are the policy areas in which executives should be focused on planning for divergent outcomes? Last night’s debate highlighted three main areas.

1. Coronavirus response

Trump and Biden have fundamentally different views of how to handle the COVID-19 pandemic. Both agree that the goal should be to reopen schools and businesses – but they differ dramatically in how to get there. While Trump would continue to advocate a more laisse faire approach of “learning to live with” COVID-19, Biden would push for stronger restrictions and safety precautions as a prerequisite for reopening. Of course, many of these policies are controlled by states and municipalities, but the tone and direction of White House policy will influence such decisions throughout the duration of the pandemic – as will any national strategy for vaccine procurement and deployment. Companies should therefore be engaging in contingency planning for varying degrees of lockdowns, severity of subsequent waves of COVID-19 infections, and duration and severity of the recession.

2. Environmental policy

Environmental policy is arguably the area of greatest divergence between Trump and Biden. A second Trump Administration would continue to avoid international commitments to reduce emissions, roll back regulations, and change rules impacting the Environmental Protection Agency’s ability to justify new regulations in the future. Biden would likely seek to invest $2 trillion in renewable energy infrastructure, introduce tax incentives for retrofitting buildings for energy efficiency, and restore the EV tax credit – and could even open discussions with the EU on a carbon tax. Companies in the hydrocarbons sector, as well as those in high-emissions industries, would enjoy a favorable regulatory environment under Trump, while those in “green” industries would likely face lower costs and greater opportunities to scale up under Biden. Under either president, though, companies would face uncertainty about the longevity of specific environmental policies, due to expected court challenges.

3. Immigration policy

Immigration was another area in which the debate highlighted key differences between the candidates. Trump would seek to further reduce immigration to the US. He would continue record low acceptance of refugees, more efforts to block migrants from crossing into the US from Mexico and additional measures to weaken the Deferred Action for Childhood Arrivals (DACA) program. In contrast, Biden would aim to restore the DACA program, increase the ceiling for refugee applications and reform the visa program for seasonal workers. Biden would also end what he characterizes as the “cruel and senseless” policies at the US-Mexico border. These policies would translate into differences in the size and skills of US labor force and therefore impact human resources policies for companies operating in the country.

My colleagues and I have analyzed these and other policy areas to identify the top business risks of the US election outcome across two scenarios: a status quo split in government power and a Democratic sweep. 

What is clear is that in either scenario, political risk will remain high in the US under the next administration. Policy changes will continue to affect companies’ supply chain and operations, human resources, and other functions – as well as their broader strategies in the US market.

The views expressed here are mine alone and do not necessarily represent those of EY. Some of this analysis was produced in collaboration with Douglas Bell, Adam Barbina, Ben-Ari Boukai, and Kyle Lawless.