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What a Trump or Biden win could mean for different sectors in the US economy

With the US Presidential election just around the corner we look at how a Trump or Biden win could affect the US economy.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

With the US Presidential election date set for 3 November 2020, Americans must choose whether to re-elect current Republican President Donald Trump or Democrat nominee Joe Biden.

Stock market ups and downs are part and parcel of election season. Typically in US election years, returns have been lower and volatility has been higher than in non-election years. Although this year, the pandemic has caused even more volatility, which makes comparing it with other election cycles tricky.

There are some reasons for optimism. Since 1992, the average 12-month post-election return of the US stock market has been 12.5%. Whoever wins will be hoping for a successful coronavirus vaccine to come to market which could give any chance of a recovery a strong tailwind. Remember though past performance isn’t a guide to what will happen in the future.

In this article, we’ll consider some of the policies that both Trump and Biden might introduce if they come out on top and explore the potential impacts on different sectors within the US economy.

It’s worth mentioning that the success of the policies either candidate might introduce will depend on the balance of power in America’s congress. That’s made up of the House of Representatives and the Senate. Without a majority in both, the new President could see their agenda stifled by the opposition party.

Technology

Republican party
Donald Trump
Democratic party
Joe Biden
The big tech companies are likely to remain in the regulatory spotlight under Trump. Speaking to CNBC earlier this year Trump said “there’s something going on in terms of monopoly” hinting he could be thinking about a tougher stance.

In addition, there are the familiar accusations from the President about bias in the way information is presented. We think protecting US intellectual property rights from China will remain a priority for Trump.
There’s the potential for stronger anti-trust or competition laws to be introduced, designed to restrict the power of the big tech companies. And the greater the influence of the left of the Democrat party on Joe Biden’s policies, the more stringent these measures could be.

We think protecting US intellectual property rights from China will also be supported by the Democrats and will remain on the Presidential agenda should Biden win.

Republican party - Donald Trump

The big tech companies are likely to remain in the regulatory spotlight under Trump. Speaking to CNBC earlier this year Trump said “there’s something going on in terms of monopoly” hinting he could be thinking about a tougher stance.

In addition, there are the familiar accusations from the President about bias in the way information is presented. We think protecting US intellectual property rights from China will remain a priority for Trump.

Democratic party - Joe Biden

There’s the potential for stronger anti-trust or competition laws to be introduced, designed to restrict the power of the big tech companies. And the greater the influence of the left of the Democrat party on Joe Biden’s policies, the more stringent these measures could be.

We think protecting US intellectual property rights from China will also be supported by the Democrats and will remain on the Presidential agenda should Biden win.

Financials

Republican party
Donald Trump
Democratic party
Joe Biden
Deregulation has been a common theme in Trump’s approach to the financial sector during his first term in office. This included easing stress testing rules for some banks. It would be reasonable to expect that this deregulation based agenda would continue during a possible second term in office.

Coronavirus has impacted economies all over the world and the US’ economy is no different. Trump is likely to see banks playing an important part in stimulating activity in the economy for any sort of recovery.
A Biden win would likely see a reintroduction of a series of regulations rolled back over the last few years. He’s spoken about strengthening and protecting the provisions of the Dodd Frank act (regulation on the financial industry) which was originally signed into law in 2010 by Barack Obama.

Additional proposals have also included strengthening oversight of consumer lending and increasing the transparency of borrowing costs. Like Trump though, Biden is likely to view banks as a key part of any sort of recovery in the economy.

Republican party - Donald Trump

Deregulation has been a common theme in Trump’s approach to the financial sector during his first term in office. This included easing stress testing rules for some banks. It would be reasonable to expect that this deregulation based agenda would continue during a possible second term in office.

Coronavirus has impacted economies all over the world and the US’ economy is no different. Trump is likely to see banks playing an important part in stimulating activity in the economy for any sort of recovery.

Democratic party - Joe Biden

A Biden win would likely see a reintroduction of a series of regulations rolled back over the last few years. He’s spoken about strengthening and protecting the provisions of the Dodd Frank act (regulation on the financial industry) which was originally signed into law in 2010 by Barack Obama.

Additional proposals have also included strengthening oversight of consumer lending and increasing the transparency of borrowing costs. Like Trump though, Biden is likely to view banks as a key part of any sort of recovery in the economy.

Health care

Republican party
Donald Trump
Democratic party
Joe Biden
Trump's consistently campaigned to repeal the Affordable Care Act, otherwise known as Obamacare, which was introduced under previous President Barack Obama in 2010. In November, the Supreme Court will hear arguments on whether or not the Act should become law.

Trump also opposes the government financed, public health option proposed by Biden. Trump hasn’t produced as much policy detail in this area, but he has spoken about the importance of price transparency in lowering health care costs for Americans.

He signed an executive order in September allowing the Medicare program to import prescription drugs to lower the cost of healthcare provision. So we could see further action here too.
The chances of significant upheaval in the US healthcare system are somewhat lower under Biden than under some of the Democrats he was up against for the party’s nomination.

However, Biden has often spoken of his desire to build on the legacy of Obamacare and to drive down the number of uninsured and underinsured US citizens. He essentially wants more choice and lower costs for citizens and a less complex overall system.

His healthcare proposals include a public health insurance option for citizens. This would be a government funded option which could sit alongside existing private alternatives already on the market.

Reforms to drug pricing are also likely under a Biden presidency to try to lower prices for those worse off.

Republican party - Donald Trump

Trump's consistently campaigned to repeal the Affordable Care Act, otherwise known as Obamacare, which was introduced under previous President Barack Obama in 2010. In November, the Supreme Court will hear arguments on whether or not the Act should become law.

Trump also opposes the government financed, public health option proposed by Biden. Trump hasn’t produced as much policy detail in this area, but he has spoken about the importance of price transparency in lowering health care costs for Americans.

He signed an executive order in September allowing the Medicare program to import prescription drugs to lower the cost of healthcare provision. So we could see further action here too.

Democratic party - Joe Biden

The chances of significant upheaval in the US healthcare system are somewhat lower under Biden than under some of the Democrats he was up against for the party’s nomination.

However, Biden has often spoken of his desire to build on the legacy of Obamacare and to drive down the number of uninsured and underinsured US citizens. He essentially wants more choice and lower costs for citizens and a less complex overall system.

His healthcare proposals include a public health insurance option for citizens. This would be a government funded option which could sit alongside existing private alternatives already on the market.

Reforms to drug pricing are also likely under a Biden presidency to try to lower prices for those worse off.

Energy

Republican party
Donald Trump
Democratic party
Joe Biden
Trump has focused on returning America to a “golden era of energy” in his first term as President. This has involved policies aimed at making greater use of America’s abundant natural resources, like reducing regulations on fossil fuel production.

If Trump wins the election, we expect this agenda of deregulation to continue. Last year Trump informed the United Nations that the US planned to withdraw from the Paris climate accord.
Joe Biden wants to kick-start what he calls a “green energy revolution” with a green new deal. It’s possible that the rollout of such a program would need higher infrastructure spending to make it happen.

We would also expect to see a Biden administration tighten regulation on fossil fuel producers, resulting in higher costs for the industry. Biden has also committed to re-joining the Paris climate accord should he win the election.

Republican party - Donald Trump

Trump has focused on returning America to a “golden era of energy” in his first term as President. This has involved policies aimed at making greater use of America’s abundant natural resources, like reducing regulations on fossil fuel production.

If Trump wins the election, we expect this agenda of deregulation to continue. Last year Trump informed the United Nations that the US planned to withdraw from the Paris climate accord.

Democratic party - Joe Biden

Joe Biden wants to kick-start what he calls a “green energy revolution” with a green new deal. It’s possible that the rollout of such a program would need higher infrastructure spending to make it happen.

We would also expect to see a Biden administration tighten regulation on fossil fuel producers, resulting in higher costs for the industry. Biden has also committed to re-joining the Paris climate accord should he win the election.

As we can see, each party have their own agendas and each could have very different impacts on the different sectors. But at the end of the day no one knows exactly what will happen. While we can make guesses of who'll win and then what the stock market will do after, that's never normally a good idea.

Having a balance is always a good idea, especially in uncertain times. Investments will rise and fall in value so you could get back less than you put in.

Investors should make sure they have a well-diversified portfolio. That means no matter who gets in the White House or which industries flourish the most, you should stand to benefit in the long run.

This article isn’t personal advice. If you’re not sure if an investment is right for you, please seek advice.

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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