A major factor shaping businesses in 2025 will be the evolving political landscape in Washington, D.C. With President-elect Donald Trump beginning his second term alongside Republicans taking control of Congress, significant changes could be on the horizon for businesses.
Here’s an overview of four key areas where the new administration may impact companies, industries, and the economy.
1. Tax Policy
The Basics: Business experts suggest that Trump’s second term increases the likelihood that the tax provisions in the Tax Cuts and Jobs Act—set to expire in 2025—will be extended. There may also be new tax cuts and adjustments for businesses.
What It Means: Watch for the future of Section 199A deductions for owners of pass-through entities and the state and local tax (SALT) cap. Trump has pledged to repeal the SALT cap, though most expect a cap increase rather than a full repeal.
Looking Ahead: By the end of 2025, businesses should have more clarity on tax changes.
2. Tariffs
The Basics: Trump has proposed increasing tariffs on major trading partners, such as China, Mexico, and Canada. He suggested that 25% tariffs on Mexico and Canada could begin as soon as February 1.
What It Means: Higher tariffs seem likely, according to experts like Jay Jung, president of Embarc Advisors. Businesses should prepare by diversifying their supply chains and considering domestic alternatives. Some businesses are stockpiling inventory, though that comes with risks, such as aging stock.
Looking Ahead: Further tariff details are expected in early 2025.
3. Immigration
The Basics: Immigration, particularly the possibility of mass deportations, was a central issue in Trump’s campaign, and it could affect many industries.
What It Means: Industries like manufacturing, construction, and homebuilding are paying close attention to immigration policies. Trump had supported a bill that would reduce the number of green cards available, potentially limiting employers’ access to non-citizen workers.
What It Means for Employers: Companies may face challenges hiring and retaining non-citizen employees due to restrictions.
4. Regulatory Changes
The Basics: The Biden administration introduced several new rules aimed at altering the employer-employee relationship, including changes to overtime pay, noncompete clauses, and union organization. With Trump’s win, many of these rules are expected to be overturned.
What It Means: Some rules, like the noncompete ban and higher overtime pay thresholds, have already been blocked by courts. However, businesses should remain vigilant, as many states have introduced their own regulations on similar issues. As these changes unfold, businesses should stay informed and adapt to the shifting regulatory environment.
Source: bizwomen