Trump 2.0: A Strategic Planning Guide for Business Leaders

Many business leaders should start thinking about how the new Trump administration will affect their business. This article is not about who you should have voted for, but what topics should be on the business leader’s radar screen.

Candidates from both parties make a lot of promises that they don’t keep. Sometimes they forget their promises, sometimes they can’t get Congress to move, and sometimes they take actions that don’t get the desired results. So take all campaign rhetoric with skepticism. President Trump, in particular, discards ideas before an analysis or implementation plan is done. His campaign statements should not be taken literally, although we can get a fair amount of money from his progressive articles.

Fees

Businesses that buy products made abroad or sell goods to foreign customers should watch for changes in tariffs. Most tariffs can be changed by the president without Congressional approval.

The The United States lowered tariffs repeatedly after World War II – until Donald Trump’s first term in office. His charges were targeted – most imports were not affected. But steel and aluminum from China were hit hard, along with many other products. Other countries retaliated with tariffs on US sales to those foreigners. After President Trump left office, the Biden administration kept most of Trump’s bills in place.

Manufacturing companies use global supply chains. For example, the country where the car is assembled tells you nothing about where the airbags are made. The country that exports the most cars to the Americas is … Mexico. But most cars are assembled in Mexico with parts from the US and other countries. So it’s difficult.

Although Trump has talked about big tariffs, he won’t impose big tariffs and turn his attention elsewhere. I’m a salesman, I’m a salesman. He believes that it is his strength. So expect his plan to be targeted, but bigger than eight years ago. Then he will negotiate a deal and reduce a bit. But at the end of his term, the rates will be higher. The result is that consumers of manufactured goods and agricultural products will pay more, and the additional costs will have to be passed on to consumers. An increase in tariffs will not kill the economy, but it will certainly be a negative point.

Immigration & employment

Businesses that employ low-skilled workers should monitor changes in immigration policy.

Before Trump’s presidency, the number of immigrants was about 1 million. Under Trump, immigration declined. Then the Biden administration loosened the rules for refugees seeking asylum. Online immigration rose sharply in the Biden administration. Statistically, the number of immigrants from abroad went from one million a year to three million a year.

The country’s job gains in recent years have been boosted by this immigration. Some immigrants received work permits, others worked without permits. The economic impact was palpable. Employers found workers, and new workers spent money.

With fewer immigrants, businesses will find it difficult to hire people for low-skilled jobs. This will reduce economic growth but not reduce activity. Companies considering using advanced technology to replace low-skilled workers should accelerate those plans.

Environmental and Climate Laws

The administration has a wide range of discretion regarding environmental and climate laws. President Trump wasn’t really an executive in his first administration, but he slowed down the growth of new regulations significantly. A second Trump administration will likely slow climate-related regulations and enable more energy production and transportation.

The range of possible changes is very wide. A few new regulatory measures will be introduced, but reversing existing regulations often requires a lengthy process. Companies should not expect too much of a refund. Instead, they will find that their worst fears of the changes to come are unrealized.

Taxes

President Trump will certainly keep the corporate tax cuts he implemented in 2017 in place—it would take Congressional action to eliminate them. The individual tax reforms that Trump passed are due for an overhaul next year, and it seems very likely.

In some of his campaign speeches, Trump has talked about reforms that seem unlikely to be implemented, such as proposals to exempt Social Security from taxation. The restoration of unlimited state and local deductions (SALT) has been mentioned, but in the past some Republicans favored the limit as a way to punish states with high liberal taxes. He may be forced to make the business costs of purchasing goods permanent, which may have some impact on spending.

It’s too early for companies to make plans for tax law changes, but keeping an eye on the news makes sense.

Total Influence

The new president’s policies will likely slow economic growth by a small amount. The long-term average GDP growth rate works out to two percent (inflation adjusted). The effects of immigration restrictions could reduce our growth potential by one or two-tenths of a percent. Tariffs would raise prices, but with a one-time effect rather than causing permanent inflation. Relaxed environmental and climate policies would boost economic activity at a fraction of the cost. The effects of the policies will not be seen by many businesses, which are overwhelmed by the changes taking place in the competitive environment. However, specific businesses will find challenges—and opportunities—in the coming changes.