All eyes have been on the U.S. since Donald Trump won the election last November. So far, outcomes have been mixed: on one hand, the Dow Jones Index has witnessed a historical surge since his election win, rising from just below 18,000 to above 21,000. The U.S. Dollar Index has seen similar benefits, strengthening from just below 97 to nearly 102 in early April. While these factors play along with Trump’s campaign slogan to “Make America Great Again,” not all policy changes were welcomed and many have seen substantial criticism.
With the flurry of activity coming out of the new administration, understanding the impact on technology is not obvious; however, the impact of the changes will no doubt ripple globally. While many have commented on the impact that anti-immigration policies may have on retention of foreign talent and recruitment, dramatic policy changes to U.S. organizations like the EPA, FDA, USDA, and DoE, not to mention trade agreements, tariffs, and the Affordable Care Act are all poised to rapidly change the innovation landscape.
To help companies better prioritize their innovation agendas, below we call out key industries where policies set by the Trump administration will have a dramatic impact. Within each we call out the likely technological winners and losers:
- Energy. Trump’s ambition for an energy-independent U.S. alludes to a fossil fuel dominated nation in the next four years as he aims to reduce road blocks for the oil and gas industry put in place by former President Obama.
- Winner: in the past few years, the oil and gas industry turned towards cost cutting technologies to improve margins during a prolonged period of low oil prices. Players are now armed with a suite of digital tools that will only strengthen their expansion in a more free market. Look for those who have gained invaluable experience in implementing process efficiency improvement technologies to move quickly in the next four years. Laggards will need to quickly rollout digital oilfield initiatives at their operations in order to compete.
- Loser: energy storage, be it stationary or mobile, will likely see slower than anticipated growth as policies surrounding vehicle efficiency, transportation related emissions, and subsidies for renewables work against energy storage adoption. We expect that large corporations will continue initiatives in this space around commercialized batteries, such as Lithium-ion, but advanced batteries and fuel cells will likely garner less attention.
- Digital Economy. Trump’s stance on the economy remains domestically focused with initiatives to increase the workforce by creating at least 10 million jobs in the next four years. Trump also seeks to protect the nation’s infrastructure from international interference, both physically and digitally.
- Winner: as computing pervades every area of personal and industrial space, vulnerabilities arise faster than firms can find and patch them, and new forms of security have emerged in pursuit of securing the digital world. Cyberphysical security solutions will likely gain even more attention, funding, and adoption that they already have in the past few years. Numerous obstacles still remain before we witness broad IoT cybersecurity, but we expect the strong focus from the Trump administration to drive industry-specific solutions in the near-term.
- Loser: unfortunately, the hype of artificial intelligence (AI) and robotics in the manufacturing sector may hit another one of Trump’s “walls.” With intentions to reinvigorate the U.S. manufacturing industry by creating jobs, several technologies aimed at replacing human workers are likely to meet some pushback. However, not all hope is lost for AI and robotics, as new assistive technologies meant to increase productivity and quality of work are quickly gaining momentum; as discussed in the Lux report Warehouse Robotics: Assistive Tools, or Replacements for Humans? (Member sign-in required).
- Healthcare. The repeal of the Affordable Care Act (ACA), or Obamacare, took center stage in Trump’s campaigning. Although it remains unclear whether a complete overhaul of the ACA will take place, Trump has in the past openly pledged to “come up with a new plan that’s going to be better healthcare for more people at a lesser cost.” Trump is also a proponent of relaxing regulatory approval processes. With these two forces at play, the future of health care will see past winners lose, and past losers win.
- Winner: with a pledge to reduce healthcare costs, a suite of behavior technologies centered on changing diet, exercise routine, or smoking habits will likely emerge as winners as discussed in the article Alert, coach, and motivate: How digital technologies change consumer behavior (Member sign-in required). Behavior augmentation tools hold the promise of promoting wellness and preventing future sickness, which has been cited as a more economically favorable approach to health management than disease treatment. With that said, it is highly possible that an emphasis on improving hospital operations would result in only a subset of behavior augmentation technologies seeing considerable uptake; those looking to help patients and consumers outside of the hospital will lose.
- Loser: with Food and Drug Administration (FDA) approval processes relaxed, more technologies from adjacent industries (consumer, industrial, military) will make their way to the health space. While these changes may paint a rosy picture, technologies previously differentiated from competition by regulatory clearance will lose. Within neurostimulation, companies such as ElectroCore and NeuroMetrix (Member sign-in required to view full company profiles) will likely lose their current competitive edge as regulatory barriers to entry vanish.
- Agriculture. Relaxed regulatory clearance processes and a decreasing focus on the environmental will be the two main forces to dictate winners and losers.
- Winner: within the agriculture space, one of the biggest industries to be held back by regulation is modified crops. With no strong stance on genetically modified crops and with the intention to relax Environmental Protection Agency (EPA) rules, the U.S. is likely to see a substantial increase in activity in this space during the Trump administration. Along the same vein, developers of pesticides who have been held back by regulatory hurdles up until now will likely take advantage of the opportunity to advance chemistries with long environmental residual timelines and less attractive environmental toxicity impacts.
- Loser: technologies that serve an environmental need, or whose primary competitive differentiation is driven off of a positive impact on the environment, will lose. These include slow-release fertilizers and food waste technologies that can reduce greenhouse gas emissions.
It’s crucial to realize that the impact of the Trump administration on innovation will go beyond national borders: emergence of winning and losing technologies in energy and infrastructure, the digital economy, health care, and life sciences will impact U.S. trade and innovation partners, regardless of geography. With the U.S. being a dominant force in the global innovation ecosystem, the most pressing question for corporations is “How does the new administration alter our risk profile for innovating in the U.S.? Should we plan to innovate elsewhere?” Clients can expect Lux analysts to keep a close eye on the rapidly changing regulations and policies under the new administration to understand what it means for innovation in these turbulent times.
For more information contact Noa Ghersin at Noa.Ghersin@luxresearchinc.com or Yuan Sheng Yu at YuanSheng.Yu@luxresearchinc.com