Donald J. Trump achieved his goal – he is officially President of the United States. Since his inauguration, the new POTUS has taken various groups to task for transgressions against the United States. These changes impact everyone from the everyday citizen to those holding a green card who are from one of the seven countries locked out in a recent travel ban. But what about businesses?
Whether small, medium, or a large, sprawling corporation, any business that operates in the United States is likely to experience shifts because of Trump’s regulatory changes. Some of these will be beneficial to all business, with some only applying to specific industries. Get informed of what you can expect right here.
Fewer Immigrant Workers
If your business relies on immigrant workers, Trump’s changes could impact you the most. Plans to build a wall between the United States and Mexico stand to significantly reduce the number of day available workers. Certain niches will struggle with this more than others; for example, construction sites and agricultural businesses that rely on migrant workers may suddenly find they aren’t able to secure workers as easily as before.
Likewise, businesses that rely on temporary or seasonal foreign workers from Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen may want to begin making arrangements for the next 90 days. Though it isn’t likely to affect people already here, workers who come and go may find themselves waiting a long time if they have to be vetted before coming back into the US.
The news isn’t all bad; these changes should encourage businesses to hire local American workers instead. Some of the changes, like the temporary 7-country travel ban may drag on, or worse yet, result in many workers permanently banned from working in the US.
So what should you do? Smart businesses should focus on keeping costs down while seeking to employ within the country until the dust settles. Be sure to have backup employees at the ready, and be sure that any foreign workers have all of the necessary documentation and permissions to work in the United States. Most importantly, be aware that future immigration changes could be even more restrictive. Now is the time to ensure that you’re prepared.
Fewer Restrictive Regulations
Business is a complex topic in the United States. Laws and regulations often frame exactly what you can and can’t do, both within and out of the country. Some of these regulations really do benefit businesses by offering them certain protections under the law, but the vast majority are highly restrictive and hinder more than they help. That’s likely just one of the reasons why Trump has stated repeatedly that he’s committed to repealing unnecessary regulations.
Essentially, the POTUS wants to give businesses more freedom to work, grow, and employ people within the United States. Whether you’re small or large in size, that’s a very positive thing.
Trump’s regulatory changes have been the most sweeping of all; he’s already pledged to do away with two regulations for every new regulation he implements. Even the U.S. Chamber of Commerce agrees that this is a very good thing.
The National Small Business Association showed their support, too.
“We look forward to working with the Administration as the many remaining details and decisions are worked through, to ensure that reducing regulations on smaller businesses will be a top priority and that regulatory policy moving forward is maximally effective for small businesses.”
With research showing that small businesses take the hardest hit (often paying as much as $83,000 in regulatory costs alone for new or businesses about to ramp-up), it’s not hard to see why less regulation could help small businesses to grow and succeed by making it easier to get through those tough first few years. Fewer regulations along with potential huge business tax cuts will provide new jobs, more tax revenues, and a tremendous overall impact for all businesses.
It’s difficult to see the full impact of expected changes the new POTUS will implement with regard to regulation. But given that he has his own interests in business, and widespread support for businesses all across the country, it’s very likely that any changes will be beneficial for business growth and employment.
For the time being, the best action you can take is to keep a close eye on the changes. Be prepared to adjust your practices when needed. Most changes will impact small business first followed by huge impacts to big corporations.
More Affordable Employee Health Care
It’s no secret that Obamacare has been a bit of a disaster in this country, especially when it comes to businesses who are providing health care plans for employees. The Affordable Care Act did benefit many, but for as many as it benefitted, it caused direct harm to others. Skyrocketing prices on health care plans, mostly caused by restrictions on selling insurance across state lines, did little for the middle class and, in some cases, levied heavy costs onto medium-to-large who provide healthcare benefits to employees.
In many instances , the changes in costs were enough to drive small businesses into bankruptcy. Conservative estimates suggest that group policy premiums rose by as much as 25 percent in some cases – that’s a hefty amount when you’re paying $200 a month or more per employee. It’s led several businesses to begin hiring practices that allow them to deny benefits altogether; that’s not good for Americans or for business.
Here’s a short hypothetical case study to explain why rising premiums are such a problem. Picture a factory that employs 2,500 Americans all across the country. Each employee’s health premium costs the company $200 per month; the employee contributes the same amount for a total of $400. A 25 percent increase would see the business paying an additional $50 per employee. That’s a whopping $12,500 coming from business coffers every single month, or $150,000 a year.
Employees suffer under the increases, too; they’d pay an additional $600 per year and will likely have higher deductibles.
Instead, Trump plans to expand access to insurance by allowing companies to sell across borders. . This should theoretically inspire competition and drive prices down, especially in states like California where health care premiums are notoriously high. He’ll also give people access to federal health savings accounts that will effectively help them to manage their own health care and costs.
Better yet, businesses may be able to deduct their portion of the group policy premiums (if they pay one) at tax time. That could spell significant savings for larger businesses, and is likely to benefit small businesses as well.
Take action by re-evaluating your group policy plan. Remember that the new POTUS hasn’t changed the Affordable Care Act altogether just yet, so it may not be wise to drop your provider now. One excellent move to make is to speak with your provider or broker to find out how they plan to remain competitive once the border restrictions lift; you may find that they’re willing to reduce costs just to keep your business.
There’s not a business on this planet that would agree to saying that more taxes are a good thing for business. It simply doesn’t make good fiscal sense to tax businesses into the ground, particularly when those businesses hire hundreds or thousands of employees all across the country. But by the same token, taxes are a necessary evil that help to cover everything from roads to education, and a significant portion of America’s tax income does come from business.
Finding a balance between the needs of businesses and the needs of Americans hasn’t been easy. Previous presidents, including John F. Kennedy and Ronald Reagan, have both pushed forth extreme cuts to taxes that had a positive benefit not only on the overall economy, but on increasing tax revenues as well.
It’s a curious thing at first glance, especially if you aren’t particularly familiar with tax laws and regulations, but reducing taxes can often directly improve the economy and and increase tax compliance and revenues in general. That’s positive for just about everyone, regardless of whether you’re looking at the government, the public, or businesses-at-large.
In contrast, Hoover and Roosevelt did a double-whammy on America’s economy, raising tax rates so dramatically high that many stopped paying them altogether. Anyone who’s watched the Disney Classic “Robin Hood” with their kids knows what happens when the nation’s most poor can’t afford to pay the Sheriff of Nottingham; they hide it from view instead.
Trump’s potential changes will lower business taxes to as little as just 15 percent, encouraging trickle-back growth that allows for more hiring, easier expansion, and easier adaptations to a fluctuating market. Though it hasn’t gone into effect just yet, now is the time to re-evaluate your tax approach. Book an appointment with an advisor for a full review.
Import and Trade
One area where changes could be negative lies within import and trade. If your corporation regularly works with factories in countries like Malaysia, China, or Mexico, there is a small chance that the new POTUS’ changes could potentially impact how cost-effective it is to do business with these countries.
In an effort to keep work on home soil, preventing outsourcing to lower-cost countries, Trump is levying heavy tariffs against a number of countries. In some cases, such as it is with regard to China and Mexico, these tariffs could be as much as 45 to 35 percent.
It’s no secret that Trump is against free trade as a general concept; that’s part of why he’s also denounced and withdrawn from the Trans-Pacific Partnership, too. This will impact clothing and textiles first, with secondary effects on other industrial businesses coming down the pipeline, too. It may also cause stagnation in agricultural industries throughout Mexico, something on which many American businesses in the south rely quite heavily. Finally, withdrawing from the TPP, while generally positive, could eventually impact business investments, too.
The TPP is already history, but whether or not Trump will go through with plans to enact tariffs on Mexico and other industrial heavyweights remains to be seen. Keep a close eye on regulatory changes and be ready to act if and when things change.
Vast Changes to the Energy Industry
In recent months and years, questions about the environmental safety of industries like oil and gas, coal, and energy have significantly hampered businesses from expansion. Pipelines and new energy production facilities have been hotly contested in everywhere from Dakota to California. Some of the concerns are legitimate, while others simply don’t hold up under scientific and regulatory scrutiny. Unfortunately, much as it often is in a world where social media has the potential to insight inflammatory responses, the entire industry has taken a severe hit along the way.
Even energy businesses that focus on environmental protection and do their best to ensure it have struggled under public scrutiny, sometimes unnecessarily. Given that oil and gas provides America with approximately 10 million jobs and as much as 8.1 percent of the Gross Domestic Product (GDP), it isn’t realistic to just toss the baby out with the bathwater like this.
Fortunately, Trump is taking steps to negate environmental restrictions; that should have a freeing effect on businesses in oil and gas. If the pipelines do go forward, more oil is expected to be produced and used right here in North America, rather than being imported or exported with hefty tariffs.
If your business is in the energy industry, expect massive changes over the next four years. A reduction in taxes, fewer environmental restrictions, more pipelines and an increased rate of growth in the industry should produce a hefty boon for these industries. Even solar companies stand to benefit simply because taxes will come down.
Donald J. Trump is a man with a focus on business – that’s how he’s managed to grow his empire in the first place. His shrewd ways can often seem a bit like a bull in a China shop at first, but sometimes, that China shop is negatively impacting America’s businesses in the first place. Simply put, sometimes you have to smash the dishes and start over to rejuvenate your kitchen.