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How the President Elect Could Change the Business Landscape

As President Obama’s presidential term comes to a close and we make way for President-Elect Donald Trump, there are going to inevitably be a lot of changes. Some of those changes will be focused on the business environment. When the peaceful transition of power takes place on January 20th, new policies and ideology will undoubtedly change the way business and companies around the United States operate. These new alterations and changes could spill directly into the manufacturing sector. So, before the inauguration takes place, let’s take a look at some potential changes President-Elect Donald Trump could impose and how those may affect the manufacturing sector and the business environment as a whole.

One way the Trump administration may change business operations in the United States is through imposing tariffs. Tariffs, or taxes on imports, serve three main goals or functions. They look to generate a source of revenue, protect domestic industries, and remedy trade distortions. Over the past decades, U.S. manufacturing’s base has weakened dramatically due to companies moving operations to lower cost countries. Because of this new practice, the Trump administration looks to impose 5 to 10 percent tariffs on all imports. The President-Elect hopes this new policy will make American companies more competitive with foreign counterparts as well as getting other nations to lower trade barriers.

Throughout his campaign trail, the president-elect vowed to slash regulations that harmed businesses and created over regulations that ultimately damaged our economy. According to the Trump administration, since President Obama took office in 2009, 229 new major regulations have been enacted. Regulations from as far back as 1980 have resulted in an economy that was $4 trillion smaller than it would have been in the absence of regulatory growth since that time according to Mercatus Center at George Mason University. The future president proposes the idea to ask all department heads to submit a list of every wasteful and unnecessary regulation which kills jobs, and which does not improve public safety, and eliminate them. He also proposes a strategy to end radical regulations that force jobs out of our communities and inner cities. He believes that these two strategies will not only help increase jobs in America, but will also allow companies to be more profitable, which could lead to more companies keeping business here in the states.

The Trump administration is also looking to alter the business landscape through corporate taxes. Trump’s stated goals, as a result of a tax reform, is to make the United States a friendlier business environment. In order to accomplish this goal, the President-Elect looks to slash the 35% tax rate for US corporations and businesses. His administration plans to replace the 35% rate with a 15% tax rate. Additionally, Trump’s tax reform looks to encourage US employment. Under his plan, cash flow tax would permit a deduction for domestic wages, thus encouraging the use of a domestic workforce. Though the results of Trump’s tax reform may not be seen for a while, the President-Elect believes that this specific tax reform could lead to an immense increase in the economy, as well as the addition of almost 2 million jobs according to the team’s website.

Since Trump’s unveiling of his anticipated policies, many corporations have changed their business strategies. At the end of the 2016 year, Ford announced that they will scrap their plans to build a plant in Mexico and add 700 jobs in Michigan. Ford CEO Mark Fields stated that this was partially due to the “vote of confidence” in Trump as well as alternative reasons. Just recently, Fiat Chrysler announced that they will invest $1 billion in United States factories. This will create an additionally 2,000 jobs and strengthen American manufacturing.  Carrier has also followed suit of manufacturing in the United States versus international. In November of 2016, Carrier announced that they will remain in Indiana rather than shifting their operations to Mexico. This will keep some 2,000 jobs here in the United States.

It is too soon to tell if this trend will continue or become a fizzled out fad. However, one thing that is certain is that Trump’s policies are definitely creating buzz in the business world even before he takes office. And although we don’t know if these proposed policies will be effective, we have already seen tangible results from companies like Ford, FCA, and Carrier that give some credibility to his ideas. Either way, in just a few short days, we will soon find out if Trump’s fresh policies will have a substantial impact on the future of U.S. manufacturing.  

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