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The incoming US President talks a big game on the economy – but will the hits land?
Post-election, business owners across the US are asking how the change in the White House will affect their operations.
Many SMB owners will be looking forward to the proposals to further streamline and reduce the tax system. The key promises include lowering the corporate tax rate from 35 percent to 21 percent, an incentive to bring foreign earnings back to the U.S. at a low “repatriation tax” rate; full and immediate deduction of certain capital investments; tax credits for companies that give paid family and medical leave to their employees; and extending QBI deductions for many sole proprietors, partnerships, and S corps.
There’s more favorable news for SMBs with the recent Federal Reserve rate cut, plus another predicted before the end of the year, meaning that by the time Trump takes office, borrowing will be cheaper.
Inflation – a relic of covid brought under control by the current administration – is likely to be a big issue, and the new president will want to continue the trend. Businesses can expect policies that will make it easier and more profitable to do business in the US.
Deregulation
The returning president has a track record of deregulation – from health and safety at work to oversight of financial institutions.
This time, look for measures to reduce rules that discourage innovation, job creation, and investment.
Tariffs
Less positively, tariffs have become a cornerstone of the President-Elect’s economic rhetoric. While the aim is to boost domestic manufacturing in the long term, the short-term picture may be less rosy. The new administration is proposing tariffs of 20 percent on all Chinese imports and rates of as much as 200 percent on products made by companies that move manufacturing from the U.S. to Mexico. This will mean that many items will become more expensive, leaving businesses to decide whether they reduce their profits or pass increased costs to the customer.
Uncertainty
The big issue for SMBs may be more deeply rooted as the incoming President is well known for sudden changes of direction.
There has been very little detail in the plans for the economy and businesses do need certainty if they are going to plan for the future.
What can you do to help your business in the coming months?
- If you are likely to be affected by tariffs, it may make sense to over-purchase now while prices are low. Funding these purchases could be a solution.
- Keep up to date with changing regulations by subscribing to the Swoop Newsletter. We’ll bring you regular updates to help you make the most of any new rules that come into play.
- Make sure you know and stay within your limits when it comes to risk. Hedge your bets for uncertain times.
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