With the presidential election having been decided, the countdown until Inauguration Day now begins. For businesses, this can feel like a time of uncertainty. You know that there are changes you should anticipate, but what actually are those changes? It can be hard to find the time to research the possible impacts that a new presidency can have on your business considering that you still need to make time to actually run the business. But you don’t want to be blindsided either—it’s important that your organization is prepared for the months ahead and keeping an eye on what things may be changing is crucial.
It can be a lot to juggle. At Payday HCM, we’ve seen a lot of elections throughout the years, and we’ve seen so many potential clients come to us with this exact issue. Without the proper resources and assistance, you may start to feel overwhelmed. So, then, the question is: What sorts of changes can you anticipate as a business owner once President-elect Donald Trump takes office?
In this article, we’ll go over what a second Trump presidency means for business owners. We’ll go over the different promises President-elect Trump has made on the campaign trail and how that aligns with his first presidency. The main topics we’ll discuss in this article include:
- Tax Relief
- Deregulation
- Tariffs
- Other Issues That Could Impact Businesses
By the end of this article, you’ll have all the information you need to know to ensure you can take the best next steps for your business.
Tax Relief
Some of the more concrete policy changes to come out of the Trump campaign have been his proposed tax cuts.
Building On The Tax Cuts And Jobs Act
Back in 2017, Trump’s Tax Cuts and Jobs Act changed the corporate tax rate from 35 percent to 21 percent. In his second term, Trump will look to take these tax cuts even further, lowering the corporate tax rate from 21 percent to 15 percent.
Trump’s ability to enact these tax cuts depends on how the congressional races shape out. At the time of writing this, control of the House Of Representatives is still up in the air. The outcome of those elections will determine how easily Trump can make this tax change.
According to Investopedia, the Tax Cuts and Jobs Act also brought a number of other changes to the types of deductions and other tax rates that affect businesses, including full expensing of short-lived capital investments and the scaling back of the Alternative Minimum Tax.
The effects of Trump’s proposed tax cuts go hand-in-hand with his proposed tariffs which we’ll discuss a little later in this article.
Deregulation
Trump’s first term involved dismantling a lot of existing regulations around financial institutions, the manufacturing industry, and the energy sector. His second term would see a continuation of this work.
Rolling Back Regulations On Oil And Gas
Part of Trump’s efforts to lower prices is by removing regulations surrounding oil and gas, and ditching some of the subsidies for electric vehicles and solar and wind power provided by the Inflation Reduction Act. According to the Associated Press, Trump wants the U.S. to have the lowest-cost energy and electricity of any nation in the world.
Trump also plans to limit the amount of regulations around offshore drilling to boost U.S. oil production. This would build on his efforts during his first presidency, which saw U.S. oil and gas production leap ahead of Saudi Arabia and Russia. According to Forbes, the increase in production helped to lower gas prices which helped lower prices for businesses in the transportation sector.
Labor Laws And Deregulating The Finance Industry
Trump also aims to decrease regulations surrounding labor and financial institutions. Trump’s first term saw him rework the Dodd-Frank Act to limit regulations on financial institutions that lend money to small businesses.
Trump also aims to remove regulations surrounding overtime pay and workplace safety regulations. Trump highlighted in his campaign his desire to prohibit taxes from being taken from tips as well as overtime pay.
Tariffs
Tariffs are another component of Trump’s economic plan that could have residual effects for businesses.
Using Tariffs To Boost Domestic Manufacturing
Part of Trump’s economic plan relies on implementing tariffs on foreign products in order to bolster manufacturing in the U.S.. According to Fortune, Trump has proposed a 10 to 20 percent tariff on all foreign goods and a 60 percent tariff on products coming from China.
Trump’s goal with these tariffs is to encourage businesses to purchase domestically produced goods while also increasing the amount of jobs in sectors that would typically rely on importing goods from other countries. An analysis performed by the Federal Trade Commission on Trump’s tariffs during his first term found that tariffs on steel and aluminum led to a 1.9 percent and 3.6 percent average increase in U.S. production of the materials, respectively.
The analysis also found that prices of steel and aluminum in the U.S. also increased as a result of the tariffs by 2.4 percent and 1.6 percent, respectively. A similar phenomenon was found when analyzing the tariffs on goods from China, with imports from China dropping by 13 percent but prices of domestic products increasing by 0.2 percent.
Tariffs And Tax Cuts
The tax cuts and tariffs that Trump has proposed for his second term are somewhat reliant on each other. There are some worries that Trump’s tax cuts could lead to increases in the national debt. According to Reuters, the Congressional Budget Office estimates that an extension of Trump’s 2017 tax cuts could add $4.5 trillion to the national debt.
One of the worries here is that an increase in deficit spending could lead to higher inflation, something that Trump’s other economic policies are looking to limit. According to CBS, Trump’s proposed tariffs would act as an offset for possibilities of increased national debt. The only roadblock here is the tax cuts would require congressional approval whereas the tariffs would not.
Other Issues That Could Impact Businesses
There are a handful of other issues, some of which aren’t directly related to the economy, that could still have impacts on small businesses.
Immigration
Part of Trump’s proposed actions for his second-term include sweeping changes to how the U.S. handles immigration. According to PBS, Trump has promised the biggest deportation event the U.S. has ever seen.
This has implications for businesses who operate either in or collaborate with other businesses in industries that largely employee foreign-born workers. According to the U.S. Bureau of Labor Statistics, foreign-born, non-citizen Black workers are represented most often in health-care support roles as well as transportation; foreign-born, non-citizen Hispanic workers are most often represented in construction, building, and grounds cleaning.
DE&I
Diversity, equity, and inclusion programs have already been on the decline throughout the past year with companies like Lowe’s and Ford scaling back their initiatives. According to the Society of Human Resource Management, the Equal Employment Opportunity Commission under Trump is likely to challenge any race or sex-based intitatives aimed at promoting diversity and inclusion.
Trump has also previously banned certain trainings for government officials as apart of an effort to scale-back diversity trainings. These could all have impacts on how small businesses conduct their own hiring and training processes.
Climate
While we touched briefly on Trump’s proposals for lowering regulations surrounding oil and gas production, his policies around the climate could still have broader implications for those who work in the energy sector or closely with other businesses that do.
According to the Associated Press, the Inflation Reduction Act provided tax credits to businesspeople who built new solar or wind farms. In his second term, Trump is likely to go after any legislation that encourages alternative energy sources like these tax credits or credits surrounding electric vehicles.
Get A Head Start On What’s To Come
Navigating change is a difficult task, especially when it comes to changes in presidential administration. As a small business owner, it can feel overwhelming to figure out where your business lies in the grand scheme of things. What sorts of things are likely to impact you and what things are not? What do you need to be on the lookout for? What should you be expecting? These are all questions that, after reading this article, you will hopefully be more confident in being able to answer.
If you got this far, though, you’re probably desperate for a break. If this all sounds like a lot, that’s because it is. Don’t worry, though—we’ve got you covered. From hiring and onboarding to payroll, we’ll take care of the hard stuff so you can focus on what truly matters.
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