As the U.S. prepares for President-elect Trump’s second term, businesses are adjusting to his anticipated economic policies. Market reactions have been positive, with stocks rising as traders predict the administration will focus on reducing corporate taxes and loosening regulations, both hallmarks of typical Republican governance.
A Democratic lobbyist shared that clients have heightened expectations given the campaign promises made by Trump, noting that there is little time to waste in fulfilling them. The prospect of a unified government raises hopes for a swift shift towards tax cuts and a business-friendly regulatory environment.
Yet, alongside these promises, businesses are cautious about potential risks posed by Trump’s plans for hefty tariffs and mass deportations. These initiatives, though geared towards reshaping industries, carry the potential to disrupt both domestic and global operations.
Trump’s tariff plans spark debate, seen by supporters as a way to boost U.S. manufacturing
One of the most watched issues is Trump’s tax reform agenda. With Republicans set to control both chambers of Congress, they are aiming to pass a major tax cut within the first 100 days of the new term. This will likely include making the tax cuts from his 2017 tax overhaul permanent and pushing to reduce the corporate tax rate to 15%.
Mary Burke Baker of K&L Gates emphasized that tax cuts might come at the expense of other tax benefits, urging companies to reconsider their assumptions about which deductions and credits will remain intact.
Trump’s tariff strategy is another focal point for businesses. While tariffs are seen as a means to incentivize domestic job creation, many companies with international operations are concerned about the costs of new import taxes. A recent study warned that Trump’s tariffs could increase consumer costs by as much as $78 billion annually.
Despite such concerns, Trump’s supporters believe tariffs will bring manufacturing back to the U.S., though this may involve a shift away from global supply chains, creating uncertainty for businesses with global infrastructure.
Trump’s hardline immigration stance also looms large, with plans for mass deportations set to affect industries that rely on immigrant labor. His promise to target undocumented individuals, particularly those with criminal backgrounds, could disrupt sectors like construction, hospitality, and manufacturing, with major economic consequences predicted in states like California, Texas, and Florida.
According to the American Immigration Council, Trump’s immigration policies could reduce the U.S. GDP by up to 6.8%, highlighting the economic implications of his aggressive stance on immigration.
In terms of deregulation, the Trump administration is expected to favor a more relaxed approach, which could invigorate the mergers and acquisitions market, in stark contrast to the Biden administration’s more stringent regulatory actions. Many companies frustrated by Biden-era regulations are hopeful that Trump will reduce the regulatory burden and continue the reforms he started in his first term.
However, while deregulation might provide some relief, the uncertainty around regulatory changes could still be a source of concern for businesses crossing a shifting political landscape. Trump’s presidency may also intensify the pressure on businesses to align with his political views, especially on social and cultural issues.
His past threats to retaliate against corporations and executives who opposed him, combined with the GOP’s stance against ESG (environmental, social, and governance) policies, may create an environment where corporate leaders feel compelled to take a stand. Balancing business interests with political realities will require careful strategy, especially as companies confront the risks of speaking out against the administration.
