After a tight battle at the last vote, the Democratic candidate Joe Biden won, amid Trump’s controversy over alleged electoral fraud. In this article we will predict the impact that his arrival at the White House may have on domestic and international politics.
COVID-19. A new approach
Let’s start with the most topical and actual issue, the one that perhaps marked Biden’s victory, the management of the pandemic. In terms of health, Biden’s approach, as has already demonstrated throughout the electoral campaign, will be more orderly and organized than Trump’s approach. There could be greater coordination at the federal level, and in the event of further worsening, the possibility of undertaking more restrictive measures on the model of some European states.
Economic and monetary policy
Biden will have to face with a republican majority, albeit a narrow one, in the Senate while the House of Representatives will continue to remain in democratic hands. The long-awaited and predicted “Blue Wave” a democratic majority in the House and Senate has not been there and this has calmed the markets that just before the elections feared a net change of government compared to the previous legislation. With this scenario the probability of a tax increase will be lower as the fears of new more stringent regulations in some sectors such as the high-tech sector or the financial sector will be lower. Fiscal aid, especially if the pandemic continues for a long time, will be substantial. In fact, the Democrats had proposed a stimulus plan for a total of 2200 billion dollars compared to the 1800 billion of the Republicans. With regard to monetary policy, the FED is likely to be less conditioned by the Biden presidency and will continue with its expansionary action. In 2022 the mandate of Jerome Powell as head of the FED expires and it will be up to the US president to appoint the new governor.
International politics
In the last few years, the White House and especially Trump have had an openly hostile relationship towards China. The Biden government, on the other hand, could adopt a more open and conciliatory approach, thereby benefiting the sectors most exposed to exports in Asia. A change of attitude, especially in the announcement policy where Trump often took everyone by surprise, will lead to greater stability and predictability to the benefit of more relaxed and serene foreign trade relations. Reductions in tariffs are not expected, at least in the immediate future. On the other hand, some relations with nations of leaders more linked to Trump such as Putin’s Russia or Erdogan’s Turkey could be exacerbated, while reconciliation with the various international organizations such as the WTO and WHO as well as the re-entry of the Paris climate agreement, in line with the sustainable approach which Biden declared throughout his election campaign.