The world held its breath as we waited to see who would be the next President of the United States.
From a surge in voter turnout to ballot results from key swing states, the 2020 Presidential Election proved to be a real nail biter. With a new Presidential transition on the horizon, what will a Biden-Harris administration mean for retailers in this new age?
The results are in. Joe Biden has been elected as the 46th President of the United States of America and Kamala Harris makes history as the first female, first Black and first South Asian Vice President-elect. Check out our cheat sheet on the three key issues this new administration will impact across fashion and retail.
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1. The Paris Climate Agreement
Biden committing the US could mean sustainability targets are reached
What is it? Drafted back in 2015, the Paris Agreement outlines plans to curb climate change by keeping this century’s global temperature rise well below 2.0C (3.6F) above pre-industrial times and work to restrict increases further to 1.5C. Other elements of the deal involve limiting greenhouse emissions and assisting poorer nations to switch to renewable energy.
What happened? Under Trump’s leadership, the US became the first nation to withdraw from the Paris Agreement formally back in 2017 – a move only finalized after the 2020 election. Several states and businesses have since worked to continue carbon-cutting efforts such as America’s Pledge, which aims to help reduce US emissions by 19% in 2025 vs. 2005. However, with the US now representing around 15% of global greenhouse gas emissions, this is not enough to make up for the nation’s backpedal on Paris.
What’s next? Upon election, Biden has pledged to rejoin the Paris Agreement with a proposal to make US energy production carbon-free by 2035 with the country achieving net zero emissions by 2050. This reduction would be enough to avoid a temperature rise of about 0.1C by 2100, bringing the Paris Agreement’s 1.5C goal within “striking distance,” according to calculations by the Climate Action Tracker. If Biden’s plans are fulfilled, his victory could see support and a tougher stance on climate change, impacting global retail industry processes for a more sustainable future.
Trickier trade negotiations for Johnson
As the January 1st deadline looms and the UK continues to wrestle with the EU on how it should leave the union, this shift in administration could pose a challenge for Prime Minister Boris Johnson. The importance of a transatlantic trade deal grew as negotiations with the EU continued to drag. While working on US relations in recent years, commentators have suggested that UK government officials have made little effort to build ties with Democrats. Instead, pouring energy into making visits to Republican think tanks and representatives, which may come back to haunt them.
While Trump was overtly supportive of the UK leaving the EU, it’s a different story with Biden. The President-elect has made it clear that he would not support Johnson’s plans to break international law, backtracking on the Withdrawal Agreement. One issue comes into focus, The Good Friday or The Belfast Agreement, which would no longer be protected. The agreement was put in place to support the peace process between Northern Ireland and the Republic of Ireland. Biden is fiercely proud of his Irish roots and will categorically not support anything that undermines this.
Many comparisons have been drawn between Trump and Johnson, Biden even doing so himself, once describing him as “a physical and emotional clone of Donald Trump.” The development of their relationship will be interesting, with Johnson’s position not due to be contested until 2024. While Britain may struggle to finalize trade deals with the US and EU, agreements have been made with Japan and in development with Canada, Australia and New Zealand.
What this could mean for retailers?
The tougher the UK’s exit, the stronger the challenges will be for operations across all industry sectors, particularly retail. The repercussions of weaker trade deals for the UK, coupled with the ongoing implications of COVID-related issues, could equate to a significant impact on consumer spending in 2021. Those operating in the UK should be braced for the amount that shoppers are spending to take a hit. The importance of product and offering has never been more vital.
3. US/China relations
Could bridges be built between the East and the West?
Under Trump’s presidency, brands and retailers were hit with a 25% tariff on the cost of Chinese-made apparel and footwear, igniting a trade war causing China to retaliate by adding its own duties on American goods. In December 2019, both sides reached the currently-frozen Phase 1 Deal, allowing the US to reduce some tariffs while China agreed to buy more American goods and services. While the trade war isn’t expected to fully cease, Chinese officials foresee a less volatile relationship with Biden. However, US retailers aren’t likely to return to manufacturing in China on the same scale. Companies were already shifting production to Bangladesh or Vietnam, a move accelerated by the pandemic.
Additionally, Biden is working to make manufacturing on US soil more appealing, proposing funds to support millions of new manufacturing and innovation jobs throughout America and bringing back critical supply chains to be less reliant on China and other countries for production. As the Trump era comes to an end, the TikTok ban remains up in the air. Aside from calls for social media giants to take a firmer stance on the spread of misinformation, big tech was not a focus in Biden’s campaign. It’s been reported the Biden administration is expected to remain tough on Chinese businesses even if their country’s relationship becomes less unpredictable making the fate of the imposed ban unclear at this stage.
Contributions by Market Analyst Kayla Marci and Research & Analysis Director Rebecca Milne.