White House or Trump House?
In a result that surprised many, Republican candidate Donald Trump galloped his way to the White House. In an electoral campaign marked by several controversial statements made by Donald Trump, his vision for America found a majority of takers who cast their precious vote in his favor.
Ever since the historic win, there have been speculations galore as to how Trump will revive the economy and elevate America to its former glory. Businesses in the USA have kept a watchful eye on the proposed policies of the Trump government that are likely to affect their businesses. All major sectors and industries are expected to be impacted by decisions and policies that the Trump government is likely to execute.
A formidable list of US companies is waiting with bated breath for Trump to assume office on January 20, 2016. One thing is for certain that many of his decisions are likely to affect businesses either in a positive or a negative way.
1. An uncertain Stock Market
Majority of us might recall how stock markets plunged when Trump’s win was announced. Similarly, Trump is seen by many as an uncertain policy maker. His unpredictable and surprise moves could mean that the market is always on edge leading to prices of shares fluctuating enormously. As a company listed on the New York Stock Exchange, you need to be dealing with this. Also, stockbroking firms need to be wary while dealing in stocks and bonds for their customers.
2. Health Care Industry
Donald Trump in his electoral campaign spoke of replacing the Affordable Care Act. If this is indeed done, it would have a major impact on the health care industry and health insurance providers as well. Health insurance providers will have to alter their policies in order to comply with any new act that comes into existence or even if the Affordable Care Act is abolished. On the other hand, the sales list of Pharma industry will certainly benefit with a less punishing regulatory environment. Donald Trump appeared to be more lenient towards Pharma companies on issues of price capping and regulation than his rival Hilary Clinton who wanted to push harder for price caps on drugs and medicines.
3. Corporate Taxes
Trump has promised a simplified tax structure in order to promote businesses and companies. As per the sketches of the taxation law that is likely to be imposed, corporate taxes will be 15 percent for all businesses. This could be bad news as well as good news. For medium to large businesses, this proves to be good news while for small businesses this is definitely bad news. Many of the small businesses pay much less than 15% currently and if the law is applied, it could mean that small businesses will have to run a hand to mouth existence.
4. Energy Industry
The coal industry is set to get a revival if Trump comes good on his promise. The anti-regulation laws and rolling back of policies favoring renewable could be a huge boost to the energy sector. In addition to this Trump is committed to stopping payments to the United Nations for any global warming programs. The Keystone Pipeline XL phase that was rejected by the Obama government stands a chance of approval as promised by Trump. Green energy, however, may suffer as Trump is less likely to take into consideration the environmental effects and may even reverse certain earlier restrictions imposed on the energy industry.
5. Infrastructure Industry
Infrastructure industries in the USA could stand to gain if Trump delivers on his promise of making ‘American infrastructure great again’. Trump himself is a veteran of the real estate and construction industry and hence could infuse new vigor into the infrastructure industry. Even construction companies with small business list could gain if the proposed wall between Mexico and USA is built as it will take a lot of construction companies to actually complete the work.
6. Defense Industry
One of the major gainers of the Trump regime is said to be the defense industry. Trump has largely advocated his plans for the defense areas namely a larger army along with Marine Corps, new ships for the Navy and getting new jets for the Air Force. As soon as his win was declared defense industry companies showed a huge increase in the price of its stocks. If Trump remains true to his word the Defense industry and its subsequent industries could stand to gain tremendously from the strengthening of the Army.
7. The Minimum Wage Act
The raising of the minimum wage for full-time workers is another factor that can affect all businesses. Majority of the companies on the US business database are in favor of supporting a federal minimum wage of USD 12 by 2020. When the Minimum wage is raised it would mean happy workers and lesser employee turnover. The minimum wage act could invariably help companies retain their staff and also increase the collective spending power of the employees thereby boosting the economy.
8. Labor Problems
Although Trump has promised to lessen the unemployment rate, his strict views on the use of H-1B visa for cheap labor can pose a big problem for companies who depend on immigrant labor. While American will get the first preference for jobs, hiring immigrant skilled workers will pose a problem to companies if the H-1B visa is scrapped. Besides this Trump has come down hard on illegal migrants especially Mexicans working in America. A lot of industries like small time restaurants, factories, and sweatshops depend on the migrant workforce. Trump’s promised clean up of the illegal migrants will mean that these businesses lose out on a cheap workforce. Trump has promised that he will renegotiate on the North American Free Trade Agreement and if he cannot then he will not hesitate to pull out of the free deal trade. If this actually takes place illegal immigrants in America of which an estimated 5 million are Mexicans will be hit hard. Even Mexican companies that have a US virtual phone number could find it difficult to operate.
9. Losing out on business with China
An increasing number of USA companies were seeking out Chinese manufacturers for their cheap goods and products. While the buy list of these companies showed bulk orders, Trump’s aversion to China will mean that you will have a harder time in procuring goods from China. If you are dependent on Chinese suppliers and manufacturers try and look for other options so that your business is not affected due to the international policies between China and USA.
10. Companies looking to expand their businesses
Trump’s closed fisted approach to foreign investments could mean that expansion plans of multinational companies or medium and small businesses could go bust. Trump is expected to push for homegrown products and services and it may get difficult for foreign firms to cut a base in the USA. Stricter laws could mean difficult to even get a USA phone number for businesses. Besides this, the companies already in existence could face stiffer laws that are more likely to favor local companies and businesses.
11. Impact on Smaller Businesses
Smaller businessmen, however, are said to be happier with the election of Trump. Trump’s claim of lower business taxes and simplified tax structure could instill a sense of relief in smaller firms. Smaller businesses are looking forward to the reforms which will cut out red tape and make getting bank loans for small businesses much easier than before. Smaller firms have already started to list sales campaigns to cash in on Trump’s reforms.
Will Trump’s regime prove beneficial?
Although Donald Trump has still to assume official duties, his thumping win proves that some of his promises during the electoral campaign has got him the prized vote of the Americans. While the actual impact of the new laws can only be gauged once they are implemented, for businesses it will be a wait and watch situation. Depending on the industry you are in, you will need to analyze your benefit accordingly.