As the eastern seaboard of the United States enters the early hours of the morning, the 2020 United States presidential race — which many have argued is the most consequential election in generations — remains undecided.
Both President Donald Trump and his challenger, former Vice President Joe Biden, appeared to have secured electoral votes in key states, but neither could claim a clear path to victory. Officials in Pennsylvania, Wisconsin and Michigan, where many experts say the election is to ultimately be decided, warned the vote count would stretch into Wednesday and potentially beyond.
Without calls from the trio of Midwestern states, there's no way to know the winner tonight. Also unknown is what party, Republicans or Democrats, will control the Senate, which will, in turn, determine what legislation a Biden or Trump administration is able to pass come January. Adding to the confusion, the President falsely claimed victory and threatened to take the election results to the Supreme Court in a speech early Wednesday morning.
No matter what happens, the fashion industry has several key issues it must address in the coming weeks, months and years that will in some cases be made easier, or harder, depending on who is inaugurated on January 20, 2021.
Some in the private sector, including the fashion industry, are keen to see Trump exit. His protectionist take on trade, with increased tariffs on everything from wine to handbags, has made it harder and more expensive to sell products in the US. In a series of snap polls conducted in September 2020 by Yale School of Management Professor Jeffrey Sonnenfeld at a virtual conference, 77 percent of business leaders said that they would vote for Joe Biden, with 55 percent of attendees giving Trump an F for his performance over the last four years.
“[Over the past four years], meetings in Europe would start out with, ‘What is going on with the President?’” said retail advisor Robert Burke. “That reflects on the erratic nature of this office.”
However, others view a second Trump term as potentially good for business. Many of his policies, including a hands-off approach to environmental regulation and a round of tax cuts early in his first term, have benefitted the wealthiest and largest corporations. US stock futures soared Tuesday evening as the prospect of a Trump victory appeared to grow.
Still, for many fashion brands, the biggest threat is a further breakdown between the US and China, which sent $451.7 billion worth of goods to the US in 2019. Both Trump and Biden have promised a hard line on China, but “with Trump, it won’t be favourable on the trade side,” said Neil Saunders, managing director of GlobalData Retail.
While Biden would be likely to increase personal and corporate taxes, more favourable global trade relationships are better for corporations, including multinational ones that own many of fashion’s leading brands, because it will keep the cost of goods down.
“Dollar for dollar, investors prefer a lower cost of goods more than a lower tax,” said Simeon Siegel, managing director of BMO Capital Markets.
But the trade war will have to take a backseat to more immediate concerns. In the short term, fashion brands are concerned about US consumer confidence, which has plunged during the coronavirus crisis. Two out of three Americans believe the pandemic was mishandled by the Trump administration, according to a September 2020 poll by ABC and Ipsis. For retailers looking to make up for early-pandemic losses with blockbuster holiday sales, it’s imperative that consumer confidence increases.
Many analysts believe sentiment will improve regardless of the results. “No matter who wins the election, everybody just sighs relief afterwards,” said Gabriella Santaniello, founder of A Line Partners.
What’s more, retailers are in a favourable position this holiday season: they have far less inventory than usual because of pandemic-driven cost-cutting, which means they will likely have to mark down fewer goods.
“This will be the least promotional holiday season that we’ve seen in a long time,” Siegel said, adding that consumers also have fewer options to spend their discretionary income since experiences are still generally off the table. While a stimulus package will be swifter with a Trump re-election, Biden’s promise of robust stimulus measures once he takes office should keep consumer confidence up, even if Trump stalls during this lame-duck period.
“Whether it’s a Biden or a Trump ticket, both candidates have told constituents they will pass some sort of economic stimulus if elected,” said Tyson Cornell, an advisor at PwC, in an email.
But the coronavirus is not disappearing post-Christmas. In order to regain or maintain the faith of consumers, the next president will need to ensure that they believe the administration is more in control of the health crisis than it was in 2020. Otherwise, brands and retailers will face an uphill battle convincing consumers that it’s okay to shop in the new year.
“The bigger concern is the pandemic,” said Mike Duda, an investor and managing partner at Bullish, Inc. “And what industries get most affected? Discretionary, under which apparel is top of the chart.”
While there is renewed hope that the pandemic will be better controlled, and Americans (as well as the rest of the world) will benefit from the stability that comes with a President-elect Biden, it would still not be an easy first year in office.
“As you look at all these moving parts, this is not an election when a [fashion] executive will open a bottle of champagne either way,” said advisor Mario Ortelli. “There will be many moving parts. What an executive has to do is to understand the motive of the consumer and find the best way to market into the wallet.”
Fashion industry leaders lobbying for bigger structural changes in the way the business is run — from stricter environmental regulations to better working conditions — may have to wait until the crisis is averted for any significant progress to be made. And that’s only if Biden is elected. If Trump remains in power, any sort of forward movement is unlikely.
“Fashion is a driver of American business, it exports American culture globally and it also has an enormous and too often ignored environmental and social footprint,” said Maxine Bédat, director of the New Standard Fashion Institute, a think tank. “An administration that understands the importance of fashion will be critical for the future success of the industry, not just in the United States, but around the world.”
Additional reporting by Cathaleen Chen, Alexandra Mondalek and Sarah Kent.
Editor's Note: This article was revised on 4 November, 2020 to reflect news updates.