As Donald Trump prepares to assume the presidency again in January 2025, small business owners are bracing for significant policy shifts that could impact their operations, workforce, and bottom line. With promises of economic revitalization, tax cuts, regulatory rollbacks, and tariffs on foreign goods, the administration's approach carries both opportunities and challenges.
Here’s how Trump’s policy agenda could shape the small business landscape:
Tariffs: Reviving Domestic Manufacturing or Raising Costs?
Trump’s campaign trail emphasis on high tariffs aimed at bolstering American manufacturing could have ripple effects across industries. While these tariffs are intended to incentivize domestic production, they may also increase the cost of imported goods and materials, driving up operational expenses for small businesses reliant on foreign supplies.
“Small businesses that rely on imported products will likely see higher costs, which may lead to increased prices for consumers,” said Mark Hamrick, senior economic analyst at Bankrate.
However, Trump’s promise to restore domestic manufacturing could create new opportunities, particularly in sectors like construction, equipment, and manufacturing. Shortened supply chains could also serve as a safeguard against global disruptions, offering businesses more stability in their operations.
Labor Market Impacts of Mass Deportations
Trump has vowed to tackle undocumented immigration aggressively, with mass deportations slated to begin on day one of his presidency. While this could free up jobs for American workers, many industries—including agriculture, construction, food services, and caregiving—depend on immigrant labor to meet their staffing needs.
“Eliminating undocumented laborers will likely exacerbate labor shortages in key industries, driving up wages and operational costs for businesses,” Hamrick noted.
The administration’s proposed measures could also ripple into the housing market and caregiving sectors, further impacting the affordability of essential services for small business owners and their employees.
Tax Reform: A Double-Edged Sword
The Trump administration’s ambitious tax agenda includes slashing the corporate tax rate to 15%—but only for American-based businesses with American labor. Small businesses that meet these criteria could see a boost in profitability, while those reliant on offshore labor or operations may face steeper tax burdens.
Additionally, eliminating taxes on tips and overtime could ease financial pressure for businesses in the service industry, potentially making it easier to attract and retain employees. However, broader tax cuts may significantly increase federal deficits, leading to long-term fiscal uncertainty.
“Cutting taxes without addressing the federal budget gap could have unintended economic consequences that may affect small businesses indirectly,” Hamrick said.
Regulatory Rollbacks: Innovation or Instability?
Led by entrepreneurial heavyweights Elon Musk and Vivek Ramaswamy, the administration’s Department of Government Efficiency (DOGE) aims to reduce regulations they deem unnecessary, including those imposed by the EPA and SEC.
While fewer regulations may reduce compliance costs and encourage business growth, there’s concern that this approach could disproportionately benefit large corporations.
“The rollback of antitrust enforcement, for example, might allow big businesses to dominate, squeezing small businesses out of critical markets,” Hamrick warned.
Energy Costs and Inflation
One of Trump’s cornerstone promises is to reduce energy costs through increased domestic production. This could lower transportation and operational expenses for small businesses, addressing one of their most pressing concerns—inflation.
“We will drill, baby, drill,” Trump declared at the Republican National Convention, emphasizing his commitment to energy independence.
While lower energy prices could alleviate some cost pressures, global factors like geopolitical conflicts and weather patterns remain beyond the administration’s control, potentially tempering the impact.
Preparing for 2025
With potential changes on the horizon, small business owners should focus on shoring up their operations to remain resilient. Experts recommend:
Revisiting supplier contracts to mitigate risks from tariff-related cost increases.
Building liquidity to withstand potential labor market disruptions or price volatility.
Exploring tax strategies to maximize benefits under new tax codes.
As the Trump administration takes office, the interplay of policy changes will create a complex environment for small businesses. While the potential for reduced costs and streamlined regulations could foster growth, challenges around labor availability, tariffs, and fiscal policy may require careful navigation.
The year ahead promises both opportunities and hurdles, leaving small business owners with much to consider as they prepare for what’s next.
Navigating policy shifts can be challenging for small business owners, especially when it comes to securing the capital needed to adapt and grow. Berkman specializes in business lending tailored to your needs. Whether you’re looking to expand, manage cash flow, or weather economic changes, our expert guidance and flexible financing options can help keep your business resilient.
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