The U.S. technology landscape is poised to experience significant transformations under the second Trump administration. Key sectors such as the semiconductor industry, autonomous vehicles, and digital payments may experience substantial regulatory and policy shifts. These changes are expected to have far-reaching impacts on innovation, investment, and operational strategies, which in turn will impact financing and M&A activity in the technology sector. Understanding these policy shifts will be crucial for strategic planning and maintaining resilience in an evolving regulatory landscape.
Practical Implications for Technology Companies
- The CHIPS Act and Semiconductor Industry
The semiconductor industry is poised to face significant changes under the new administration. While a repeal of the CHIPS Act is unlikely, funding to semiconductor companies under the CHIPS Act may be stalled or challenged. The new administration will likely favor tariffs to subsidies, and the shift from subsidies to tariffs may reduce funding, potentially slowing innovation and growth.1 Semiconductor companies that were relying on subsidies may need to reassess their strategies, focusing on domestic production and supply chain resilience to mitigate these impacts.2 On the other hand, semiconductor companies, whose growth has been fueled by the emergence of data centers that support AI applications may see continued growth or accelerated growth to the extent the new administration supports few or no regulations on AI. - Autonomous Vehicles
The Trump administration aims to ease regulations on self-driving cars to accelerate innovation in this sector.3 This approach may involve creating a federal framework for self-driving vehicles, streamlining regulations, facilitating testing and deployment, and encouraging private sector investment and innovation.4 - U.S. Consumer Financial Protection Bureau's New Rule
and Cryptocurrency Businesses
The U.S. Consumer Financial Protection Bureau recently issued a final rule to supervise big tech payments and digital wallets. Under this rule, companies processing over 50 million transactions annually will now be subject to the same supervision as traditional banks.5 Some representatives from the banking industry support this change, arguing that providers of bank-like services should be regulated like banks, while other banking groups allege that the CFPB overstepped its statutory authority.6 The incoming Trump administration may challenge these new regulations as well as other regulations and policies, which may restrict the use of digital bank services or cryptocurrencies. - Artificial Intelligence (AI) Regulation
The AI Bill of Rights was introduced by executive order in October 2022 by the White House Office of Science and Technology Policy. The goal of this Biden administration policy was to strengthen AI safety and protect privacy rights, attempting to pave the way for responsible AI. The Trump administration will likely quickly repeal the executive order on AI, and the immediate impact may increase use of AI by the Federal government. Overall, the incoming administration will likely resist any regulation of AI, which may encourage continued or expanded investment in those businesses that are pure-play AI companies or for technologies that support AI, such as those companies whose equipment is essential for compute power needs of AI applications. - Impact on Clean Technology
Investment in clean technology benefitted under the Inflation Reduction Act and other favorable government polices, and now clean technology companies are bracing for a potential repeal of the industry's tax incentives and for increased expenses that may result from tariffs on clean-energy equipment.7 The incoming administration may make it more difficult for companies and consumers to claim tax credits for buying electric cars.8 This is one of the technology sectors most likely to be negatively impacted by the incoming administration's policies, and there may be consolidations or restructurings in this market. - Patent Policy Changes
With respect to patent policy, the next Trump administration's approach may look like the first Trump administration's approach and the administration may follow a path that would support a strengthened patent system with fewer barriers to obtaining patents, fewer opportunities to challenge issued patents, and stronger remedies for patents that are enforced.9 However, there is a possibility that new voices within the Trump administration that are known to disfavor strong patent enforcement may help shape the administration's policy on patents. This could be a wildcard in terms of the administration's approach on patent policy or the lack of funding needed to support such patent policies and programs. A significant change to patent policy could impact the prospects for technology companies that are especially sensitive to shifts in their ability to protect their businesses through the assertion of key patents or technology companies that rely on patent licensing revenue.
Conclusion
While many technology businesses, such as those businesses with crypto or AI offerings, may benefit from changes to regulations or policies in the incoming administration, other technology businesses, such as those in the clean technology sector could be negatively impacted. In addition to the implications listed above, critical to understanding the technology sector trends will also be the incoming administration's position on areas of the law that are critical to the technology industry, such as privacy, antitrust, and export control.
Footnotes
1. CHIPS Act Funding: Biden Administration to Repeal Trump Tariffs, Business Insider (Nov. 2024), https://www.businessinsider.com/chips-act-funding-biden-administration-trump-tariffs-repeal-2024-11.
2. See id.
3. Selika Josiah Talbott, The Future of Self-Driving Vehicles Under the New Trump Administration, Forbes (Nov. 18, 2024), https://www.forbes.com/sites/selikajosiahtalbott/2024/11/18/the-future-of-self-driving-vehicles-under-the-new-trump-administration/.
4. See id.
5. U.S. Watchdog Issues Final Rule to Supervise Big Tech Payments, Digital Wallets, Reuters (Nov. 21, 2024), https://www.reuters.com/technology/us-watchdog-issues-final-rule-supervise-big-tech-payments-digital-wallets-2024-11-21/.
6. See id.
7. Clean-Energy Investors Brace for New Risks Under Trump, Wall Street Journal (Nov. 12, 2024), https://www.wsj.com/articles/clean-energy-investors-brace-for-new-risks-under-trump-269d2e1d.
8. Trump's Win Threatens U.S. Clean-Energy Boom, Wall Street Journal (Nov. 9, 2024), https://www.wsj.com/politics/policy/trumps-win-threatens-u-s-clean-energy-boom-04f16fa8?st=Q8SXCn&reflink=desktopwebshare_permalink.
9. Trump Patent Policy May Be Headed In Unexpected Direction, Law360 (Nov. 25, 2024), https://www.law360.com/articles/2265473.
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