Businesses are preparing for President-elect Trump and the way he aims to reshape the U.S. economy during his second term.
Stocks have been rising since Tuesday as traders bet the Trump administration will cut corporate taxes and ease regulations, typical goals of a Republican president.
“Clients have very high expectations whenever a new administration takes office. But expectations are high given all the campaign promises,” a Democratic lobbyist told The Hill.
“Given the possibility of a unified government, patience for tax cuts and a more business-friendly regulatory environment will be short-lived.”
But President Trump's plans for high new tariffs and mass deportations loom as two of the most serious and unpredictable obstacles facing businesses.
Here are five of President Trump's major plans that companies are preparing for and paying attention to.
tax reform
Republicans are on track to win majorities in both chambers of Congress, aiming to pass a massive tax cut within President Trump's first 100 days in office.
Republicans can take advantage of the reconciliation system, which allows them to pass legislation such as tax measures in the Senate with a 51-vote majority, bypassing the filibuster and the need for bipartisan support.
Key parts of the 2017 tax law, a legislative accomplishment from President Trump's first term, are scheduled to expire in 2025. Republicans hope to make the income tax rate cut permanent and advance President Trump's pledge to cut the corporate tax rate to 15%. .
“Assuming a Republican landslide victory, we know there will be no billionaire tax or wealth tax on the wealthy,” Mary Burke Baker, head of K&L Gates' tax practice, told reporters on Friday. spoke.
Baker also warned that Republicans could eliminate certain personal and business tax credits to fund income tax cuts, as they did in 2017.
“If you don't take anything else from what I've said today, just remember that you shouldn't think that any deduction or tax credit you like is safe,” Baker said. .
customs duty
If tax cuts are the carrot, tariffs are the stick.
President Trump is betting big on tariffs to encourage American jobs and investment in domestic industry. The tariffs, which range from 10% to 20% on all imports into the United States, have caused alarm among companies with a global presence and international supply chains.
Some economists have warned that the plan could reignite inflation, slow the economy and worsen the national deficit. a recent research Commissioned by the National Retail Federation (NRF), member countries could face much higher costs from import taxes, but President Trump's tariff proposals could cost consumers up to $78 billion annually It turned out to be sexual.
Trump dismissed his critics, calling “tariffs” “the most beautiful word in the world in the dictionary” and claiming his plan would bring “thousands of businesses” to the United States.
President Trump told Bloomberg Editor-in-Chief John Micklethwait, who objected to his tariff proposal last month, that he “spent 25 years talking about being negative about tariffs and then someone told him he was completely wrong.” It will be difficult for me to have you explain that to me,” he countered. When he appeared at the Chicago Economic Club.
Other lobbyists outlined concerns their clients have about President Trump's promise to expand tariffs and how it could affect corporate structures.
“The reason they're worried about tariffs is because for the last 30 years, most big companies have been building their infrastructure based on world markets, and we're trying to build world markets even more broadly than last time. “There is definitely a belief that a tariff wall would hurt American manufacturing and isolate China economically,” said a Republican lobbyist with insight into President Trump's world.
“American companies are grappling with this problem and trying to understand what it means.”
immigration enforcement
The president-elect focused his campaign on a promise to crack down on immigration and launch the largest deportation operation in U.S. history on his first day in office.
His goal of targeting people who enter the country illegally, particularly those with criminal records, is a major logistical step that is expected to impact businesses that rely on immigrants.
Trump's next “border czar” Tom Homan said Monday that the Trump administration plans to ramp up workplace raids as part of a broader immigration crackdown aimed at combating labor and sex trafficking. .
Democratic lobbyists explained that their clients' feelings about President Trump's immigration plan are two-fold. Some thought it was “necessary” to “mitigate some of the headwinds that Biden seems to have brought,” while others feared “riots” would occur and “impact the working environment.” Some people are worried.
american immigration council expected in october President Trump's mass deportations would lead to an annual loss of 4.2% to 6.8% of the U.S. gross domestic product (GDP).
According to the nonpartisan organization, illegal immigrants make up 4.6% of the U.S. workforce, and in 2022, three-quarters of the illegal immigrant population participated in the labor force.
The group also predicted California, Texas and Florida would be hardest hit. Industries most affected include construction, which has 1.5 illegal workers, as well as hospitality and manufacturing.
deregulation
In response to the Biden administration's crackdown on corporate consolidation, President Trump's pro-business policies are expected to lead to more activity in the mergers and acquisitions field.
The Federal Trade Commission (FTC), led by Biden, has filed a lawsuit seeking to block mergers between supermarket chains Kroger and Albertsons, JetBlue Airways and Spirit Airlines, and others.
FTC Chair Lina Khan leads the Biden administration's antitrust policy, and before the election, critics had hoped to replace her if Vice President Harris wins on Tuesday. Now those voices are eager for Trump to replace her.
Will Moschella, co-chair of government relations at Brownstein Hyatt Farber Schreck, said, “Many customers are feeling burdened by Biden's regulatory policies, and President Trump's first term is a very meaningful one. “We've seen regulatory reform,” he told The Hill.
“They were successful in reducing the regulatory burden in the first period, and I think that will be their primary focus,” Moschella added.
The FTC, led by Khan, has taken action on 38 mergers since June 2021, and companies abandoned 14 mergers during FTC investigations, according to a letter Khan sent to Republican lawmakers last year. That's what it means.
A Republican lobbyist familiar with President Trump's world says there has been “a lot of frustration over the past four years” regarding mergers and acquisitions. However, the official added that while the business community wants regulatory opportunities, “regulatory uncertainty always causes anxiety for businesses.”
retaliation
The threat of retaliation may make the business community wary of speaking out on issues of concern, especially social issues.
During President Trump's first term, he targeted companies whose actions or comments angered him, including General Motors CEO Mary Barra, Amazon founder and Washington Post publisher Jeff Bezos, and Disney CEO Bob Iger. and frequently criticized executives.
The Republican Party as a whole has also vowed to crack down on corporate environmental, social, and governance (ESG) policies, slamming companies that try to get involved in political issues.
President Trump's campaign's continued threats to arrest “enemy” journalists, target Democrats and punish other opponents have also raised concerns within corporate America.
“Business leaders will once again face pressure to speak out on social issues.” [and] “It's a cultural issue,” writes Bruce Melman of Melman Consulting in the latest edition of his book. Newsletter in the Age of Disruption.
“But the political situation [and] Stakeholder engagement strategies have evolved. Balancing business imperatives and stakeholder priorities would be just as well done as opposing the administration on certain issues and having a seat at the table on others. ”
