While counting continues and the threat of legal challenges remain, it is now clear that Joe Biden will almost certainly be the next President of the United States. The implications for America and the world have been discussed at length, but what will a Biden presidency mean for businesses in the UK?
The US will be more open to trade, but an element of protectionism will remain
Trump’s time in the White House has been characterised by an ‘America First’ mentality: a focus on supporting American industry and agriculture has resulted in a more protectionist approach. The introduction of new tariffs on trade with China illustrates this.
Much of this will change. Biden’s administration will almost certainly be more open to the world and have a significantly more globalist outlook. He will arguably take a less confrontational approach to global trade by engaging in multilateral trade discussions in a way that Trump refused to.
However, it would be naïve to assume that there will be a total shift: throughout the campaign Biden pushed a ‘Make American’ and ‘Buy American’ agenda, partly to appeal to swing voters in the ‘Rust Belt’ states of the Mid-West.
For UK businesses, it is likely to mean US businesses being more willing to deal with firms in the UK and could lead to greater demand for UK exports to the US. We could see a reduction in the barriers to doing transatlantic trade, but the full extent of this depends on the prospect of a trade deal.
A UK-US trade deal is unlikely in the near term
Trump’s support for Brexit and his perceived strong personal relationship with Boris Johnson created an expectation amongst many on the UK that a UK-US trade deal was inevitable. The reality was likely very different: while the rhetoric was warm, Trump was ultimately a transactional President, and a trade deal on terms acceptable to the UK public was always unlikely.
This is unlikely to change under Biden, and arguably the odds of a trade deal have got even longer. Biden’s priority from a European perspective will be the EU. He will likely see Macron and Merkel as the gatekeepers to Europe, not the UK. The UK’s historical role – while arguably having been overstated – as a transatlantic bridge between the US and the EU is now much less significant.
In addition, the same barriers to a Trump trade deal – most significantly on food standards and pharmaceuticals – will remain and politically it will be less of a priority for Biden. A divided political system in Washington, with the Republicans likely to retain control of the Senate, will mean passing any deal through Congress will likely be difficult.
So while the US may be more open to trade with the UK, a formal trade deal with the UK will be highly unlikely in the near to medium term. This will be significant for businesses who saw it as either a commercial risk – for example under cutting existing regulatory standards – or the opportunity to open up new markets, for example the Scotch Whisky industry. The latter will need to continue to lobby hard on both sides of the Atlantic to make progress.
Could a Brexit deal be more likely?
There is growing speculation, that a Biden presidency could spur the UK on to agree a post-Brexit trade deal with the EU in the coming weeks. Any hope of a UK-US trade deal would become even more distant if the UK failed to agree a deal with the EU. Biden – with Irish roots – has already made clear that the Good Friday agreement cannot ‘become a casualty of Brexit’. The White House going Democrat may refocus minds in Downing Street as talks conclude. While the UK will be keen for it not to be seen in these terms, this will be good news for UK businesses who want the certainty of a deal, however ‘thin’ it is.
There will be even greater global focus on decarbonisation
Biden is likely to commit the US to achieving Net Zero emissions by 2050, pledging to pass legislation within the first year of his presidency to drive forward the ‘Green New Deal’. While a divided Senate may make this more difficult it is clear that the US will re-join the Paris Agreement and will now enthusiastically engage in COP26 next November. As this is being hosted in Glasgow, the UK sees this as an early opportunity to build bridges with the new administration.
With decarbonisation affecting almost all aspects of the economy, the US joining global efforts to achieve Net Zero by 2050 will give certainty for UK businesses that the direction of travel being pursued here will continued with one of our strongest global allies now taking the same approach. It will also offer the opportunity of opening up a significant new market for UK firms developing clean tech solutions with Net Zero legislation offering an incentive to invest, whether that be in EVs, renewables or industrial decarbonisation.
What this all means for UK businesses and what you should do about it
While there is clearly a risk that the UK will be deprioritised for other European states and a UK-US trade deal is unlikely to be concluded any time soon, UK businesses should expect a greater degree of certainty and a US more open to global business. Clearly these are high-level geopolitical events, but there are steps that businesses in the UK can consider taking now to ensure they are prepared and can maximise the opportunities from a Biden Presidency: