(The hill) – Businesses are preparing for President-elect Donald Trump and the way he plans to reshape the U.S. economy during his second term.
have shares gathered As of Tuesday, traders have been expecting the Trump administration to cut corporate taxes and loosen regulations, two goals typical of Republican presidents.
“Customers have very high expectations every time a new government comes into power. But given all the promises they made on the campaign trail, expectations are high,” a Democratic lobbyist told The Hill.
“With the prospect of a potentially unified government, patience for lower taxes and a more business-friendly regulatory environment will be short.”
But Trump’s plans for high novel tariffs And Mass deportations are considered two of the most earnest and unpredictable obstacles for companies
Here are five key Trump plans that companies are preparing for and keeping an eye on.
Tax reform
Republicans are on track to gain control of both the House and Senate and want to pass a major tax cut package within the first 100 days of Trump’s novel term in office.
The GOP will be able to take advantage of reconciliation, which allows bills like tax measures to pass with a 51-vote majority in the Senate, avoiding the filibuster and the need for bipartisan support.
Key parts of Trump’s 2017 tax law, his key legislative achievement of his first term, expire in 2025. Republicans hope to make the income tax rate cut enduring and advance Trump’s promise to cut the corporate tax rate to 15 percent.
“If we assume Republicans win, we know we will not see a billionaire tax or a wealth tax on wealthy individuals,” Mary Burke Baker, who leads the tax practice at K&L Gates, told reporters Friday.
Baker also warned that Republicans could eliminate certain individual or corporate tax credits to fund cuts in income tax rates, as they did in 2017.
“If you take nothing else from what I say today, remember that you should not assume that your preferred deduction or tax credit is safe,” Baker said.
Tariffs
If tax breaks are the carrot, tariffs are the stick.
Trump is huge bets on tariffs to spur investment in American jobs and domestic industries. The tariffs, which range from 10 to 20 percent on all imports into the U.S., have raised alarm among companies with global footprints and international supply chains.
Some economists have warned the plan could reignite inflation, tardy affecting the economy and exacerbating government deficits. A current study A study commissioned by the National Retail Federation (NRF), whose members could face significantly higher costs from import tariffs, found that Trump’s tariff proposal could cost consumers up to $78 billion a year.
Trump has dismissed his critics by calling “tariffs” “the most beautiful word in the world in the dictionary” and claiming his plan would bring “thousands of companies” into the US
“It must be hard for you to talk about tariffs as negative for 25 years and then have someone tell you that you are completely wrong,” Trump told Bloomberg editor-in-chief John Micklethwait, who challenged his tariff proposal last month during an appearance at the Economic Club of Chicago.
Other lobbyists explained clients’ concerns about Trump’s promise to expand tariffs and the impact this could have on corporate structures.
“They’re concerned about tariffs because most major companies have built their infrastructure based on the global market over the last 30 years, and there’s definitely, I think even more broadly than last time, the notion that we “A wall of tariffs that will boost U.S. manufacturing and economically isolate China,” said a Republican lobbyist with insight into Trump’s world.
“Corporate America is wrestling with this and trying to figure out what this means.”
Immigration suppression
The president-elect focused his campaign on his promise to crack down on immigration and launch the largest deportation operation in American history on his first day in office.
Its aim to target people living in the country illegally, particularly those with criminal records, is expected to require enormous logistical effort and impact businesses that rely on immigrants.
Trump’s novel “border czar” Tom Homan said Monday The Trump administration plans to escalate workplace raids as part of a broader immigration crackdown aimed at cracking down on labor and sex trafficking.
The Democratic lobbyist described his clients’ feelings about Trump’s immigration plan as two-fold: Some thought it was “necessary” to “mitigate the headwinds they thought.” [President Joe] Biden brought” and some “worried it would cause unrest and impact the work environment.”
The American Immigration Council predicted in October that Trump’s mass deportations would result in a loss of 4.2 to 6.8 percent of annual U.S. gross domestic product (GDP).
According to the nonpartisan organization, undocumented immigrants make up 4.6 percent of the U.S. workforce, and three-quarters of undocumented immigrants were employed in 2022.
The group also predicted that California, Texas and Florida would be hardest hit. Sectors that would be most affected include construction, which employs 1.5 undocumented workers, as well as hospitality and manufacturing.
deregulation
Trump’s business-friendly policies are expected to spur more activity in mergers and acquisitions following the Biden administration’s crackdown on corporate consolidation.
Biden’s Federal Trade Commission (FTC) has sued to block mergers between supermarket chains Kroger and Albertsons and between JetBlue Airways and Spirit Airlines, among others.
FTC Chairwoman Lina Khan led the Biden administration’s antitrust agenda and before the election, critics wanted her replaced if Vice President Kamala Harris won on Tuesday. Now those voices are eager for Trump to install their successor.
(*5*) Will Moschella, co-head of government relations at Brownstein Hyatt Farber Schreck, told The Hill.
“During the first term they managed to reduce regulatory burdens and I think that will be one of their main focuses,” Moschella added.
The FTC under Khan has cracked down on 38 mergers since June 2021 and companies have abandoned 14 mergers during the FTC investigation, according to a letter Khan sent to Republican lawmakers last year.
“There’s been a lot of frustration over the last four years” regarding mergers and acquisitions, said GOP lobbyist with insight into Trump world. However, the source added that while the business community wants regulatory opportunities, “regulatory uncertainty is always a concern for companies.”
retribution
The threat of retaliation could lead to business reluctance to address issues of concern, particularly social issues.
During his first term, Trump frequently criticized companies and executives for actions or statements that angered the president, including GM CEO Mary Barra, Amazon founder and Washington Post publisher Jeff Bezos and Disney CEO Bob Iger.
Republicans at huge have also vowed to crack down on corporate environmental, social and governance (ESG) policies and pushed back against companies that have tried to speak out on politically charged issues.
Trump’s campaign threat to crack down on his “enemies,” jailing journalists, targeting Democrats and punishing other opponents also sparked concern in corporate America.
“Business leaders will face renewed pressure to speak out on social issues [and] cultural problems,” wrote Bruce Mehlman of Mehlman Consulting in the latest edition of his book Age of Disruption newsletter..
“But the political climate [and] Strategies for involving stakeholders have been developed. It will require tact to balance business needs with stakeholder priorities, as well as opposing the government on certain issues while remaining at the table on others.”
