In the wake of Donald Trump’s 2024 presidential victory, small businesses across the United States are assessing how new policies could impact their operations, finances, and growth strategies.
Trump’s previous administration was marked by significant tax reforms, an emphasis on deregulation, and a commitment to trade policies aimed at protecting American industries.
With his return to office, Trump’s approach to taxes, tariffs, and regulations will shape the economic environment for small businesses, especially those navigating the post-pandemic market.
While some entrepreneurs welcome his stance on tax cuts and deregulation as opportunities for financial relief and expansion, others worry about the implications of potential trade tensions and stricter immigration policies that could affect their workforce and costs.
Given the complex and evolving landscape, it’s essential for small business owners to understand how these changes may affect their bottom line. From manufacturing to retail, service-based businesses to tech startups, each sector will experience unique benefits and challenges.
Below, we dive into the specific economic policies Trump’s administration is likely to pursue, exploring what they could mean for small businesses and how owners can prepare for the coming years.
The Economic Climate for Small Businesses Under Trump’s 2024 Victory
With Donald Trump’s recent win, small business owners are preparing for an economic landscape shaped by tax cuts, tariffs, and deregulation—all key components of his campaign promises.
1. Tax Cuts and Incentives for Small Businesses
Trump’s campaign has emphasized making permanent the 2017 Tax Cuts and Jobs Act (TCJA), which provides lower tax rates and deductions for small businesses. The plan proposes a 20% deduction on qualified business income and a corporate tax rate reduction from 21% to potentially as low as 15% for U.S.-based manufacturers. For small businesses, especially those structured as pass-through entities, the tax cuts offer significant savings, which many entrepreneurs welcome as an incentive to reinvest in their growth.
Moreover, Trump aims to expand the child tax credit to a $5,000 universal credit, which may indirectly benefit small business employees and owners with families by reducing personal tax burdens (Cherry Bekaert). However, his focus on high-income and corporate tax relief has raised questions about long-term effects, as these cuts could elevate the federal deficit, potentially impacting government spending and economic stability.
2. Increased Tariffs and Trade Tensions: A Double-Edged Sword
Trump’s proposed tariffs of up to 60% on Chinese imports aim to protect U.S. manufacturers from foreign competition by making locally produced goods more competitive. This shift in policy could offer new opportunities for small U.S.-based manufacturing businesses, potentially leveling the playing field and encouraging domestic production.
However, this policy could present substantial challenges for small businesses that rely on imported goods to meet consumer demand. For example, Cubbo, a US e-commerce fulfillment company with warehouses in Mexico, uses Section 321 to ship products to the U.S. market without incurring taxes as long as the products are valued under the $800 de minimis threshold.
These tariffs could disrupt Cubbo’s ability to offer competitive pricing for products sold in the U.S. If the cost of imports rises due to the new tariffs, Cubbo would likely face the difficult decision of either increasing prices for US consumers or absorbing the additional costs, which could affect their profitability and market share.
Small e-commerce businesses, like Cubbo, could experience significant cost increases in inventory, as suppliers would adjust pricing to reflect the tariffs. According to the National Retail Federation, such tariffs could lead to a $78 billion increase in consumer prices annually, impacting affordability for U.S. consumers and trickling down to smaller retailers and service businesses.
Moreover, retaliatory actions from China could complicate international supply chains, leading to additional uncertainties and challenges for companies like Cubbo. Although the tariffs are meant to strengthen U.S.-based production, experts warn that they may disrupt established global supply chains, increase consumer costs, and create logistical hurdles for businesses that rely on imports for their inventory.
3. Labor Market Changes and Workforce Dynamics
One of Trump’s proposed immigration policies includes stricter enforcement and the potential deportation of undocumented immigrants.
For small businesses in agriculture, hospitality, construction, and other industries that rely heavily on immigrant labor, these policies could lead to significant labor shortages. With immigrants comprising nearly 73% of the agricultural labor force and a substantial percentage in the hospitality and service sectors, many small business owners may see labor costs increase as they struggle to find and retain workers.
For example, agricultural operations could face steep challenges in maintaining productivity, potentially driving up prices for consumers if alternative labor sources remain unavailable, some small business owners may explore automation or turn to domestic labor, which often comes at a higher cost.
Additionally, small businesses may need to scale down their operations or adjust working hours, limiting service availability to match a smaller workforce. As the workforce shrinks, wages are likely to increase, putting further strain on small businesses with already tight margins.
Beyond staffing, stricter immigration policies may indirectly impact small business revenues by reducing consumer spending in immigrant communities. According to research, immigrant households spend billions annually on goods and services.
A reduction in this spending due to deportations or stricter immigration rules could decrease the consumer base for small businesses in affected communities, especially those providing culturally specific goods, local services, or community-centered retail offerings. This dual effect of rising labor costs and potential reductions in local consumer spending could create substantial challenges for small businesses across the United States.
4. Opportunities for Innovation with Tech-Driven Small Businesses
In an increasingly digital economy, many small businesses are turning to artificial intelligence (AI) to drive growth, efficiency, and innovation.
Trump’s administration has expressed strong support for maintaining America’s global leadership in AI, with proposed investments and policies to advance the industry and support small businesses’ access to cutting-edge technologies.
By investing in research and development, Trump’s policies aim to foster breakthroughs in AI applications across sectors, making it easier for small businesses to leverage AI-driven solutions to streamline operations, enhance customer service, and improve decision-making.
For example, AI can support small businesses in areas like predictive analytics, automated customer interactions, and inventory management. By utilizing AI, businesses can reduce costs associated with manual labor and gain valuable insights into consumer behavior, ultimately creating more targeted and effective business strategies.
Additionally, advancements in AI have the potential to open new opportunities in industries like manufacturing and logistics, where automation can fill gaps caused by labor shortages and increase overall productivity. Trump’s commitment to advancing AI aims to ensure that American small businesses remain competitive on the global stage, equipping them with the tools they need to innovate and thrive in a digital economy.
5. Regulatory Rollbacks and Deregulation
A hallmark of Trump’s agenda is his commitment to reducing federal regulations, particularly in industries like healthcare, energy, and finance.
For small businesses, especially in highly regulated sectors, deregulation can mean lower compliance costs and greater operational flexibility. By reducing federal oversight on environmental and safety regulations, some businesses could see short-term savings, though these changes might also raise concerns about worker safety and environmental impacts.
For software agencies like Big House, which builds internal tools for enterprises and Minimum Viable Products (MVPs) for entrepreneurs, deregulation could bring a positive shift. By streamlining administrative compliance, businesses can redirect resources toward innovation and expansion, investing in tools and software that help improve productivity and efficiency.
Big House, a no-code agency, helps companies adapt quickly to a less restrictive regulatory environment by creating customized solutions that streamline workflows and data management. These types of internal tools can allow businesses to make faster, data-driven decisions while avoiding the significant time and costs associated with regulatory compliance adjustments.
Moreover, Trump’s approach to labor laws—such as scaling back wage and benefit regulations—could lead to lower overheads for businesses but may face opposition from employee advocates.
For service-oriented small businesses, reduced regulatory pressures can lower operational costs, making it easier to expand services or hire additional staff. In particular, custom software solutions empower businesses to manage labor and HR functions more effectively, adjust wage structures, or improve employee engagement, allowing companies to be more adaptable in response to these shifts.
Preparing for Change: What Small Business Owners Can Do
Small businesses can take a proactive stance by:
- Diversifying Supply Chains: To prepare for potential tariff increases and disruptions, small businesses should diversify their supply chains by exploring alternative suppliers and sourcing options, both domestically and internationally. By identifying multiple suppliers, businesses can reduce dependency on a single source, which can be critical when tariffs or global events disrupt traditional supply channels. Additionally, diversifying supply chains can provide more flexibility and allow businesses to adapt quickly to changing economic policies, ultimately improving resilience and competitiveness.
- Utilizing Technology: Investing in digital tools, such as automation and data analytics software, can streamline repetitive tasks, reduce labor costs, and improve efficiency. Digital platforms and AI-driven software help small businesses optimize inventory management, customer service, and financial planning, allowing them to focus on growth and innovation. By embracing technology, small businesses can also better monitor their operations and make data-driven decisions that align with evolving market conditions and economic policies.
- Adapting Hiring Practices: Small businesses may need to explore alternative staffing models, such as part-time or contract workers, to address potential labor shortages and cost constraints. Leveraging a flexible workforce can help companies meet demand during busy periods without the long-term financial burden of full-time hires. Additionally, businesses can look into training programs to upskill current employees, enhancing productivity while adapting to a reduced labor pool and preparing for future staffing challenges.
- Engaging with Policy Updates: Staying informed about legislative changes is essential for small business owners who want to anticipate regulatory impacts and adjust their strategies accordingly. Regularly reviewing updates from industry organizations, government agencies, and economic policy reports helps business owners make proactive adjustments. By understanding policy shifts as they occur, businesses can position themselves strategically, ensuring compliance and leveraging any new opportunities arising from changes in trade, labor, or tax regulations.
As the Trump administration begins to implement its agenda, small business owners must evaluate how these policies may affect their industries and find ways to adapt. Embracing flexibility and innovation can help small businesses navigate both opportunities and challenges ahead.
Conclusion
As Donald Trump begins his 2024 presidential term, small businesses face a dynamic and potentially transformative economic environment. With a strong emphasis on policies such as tax cuts, deregulation, and increased tariffs, small business owners must be prepared to adapt to shifts that could either bolster their growth or present new obstacles.
Industries reliant on affordable imports, such as retail and manufacturing, will need to explore strategies for handling tariff increases, while those looking to benefit from lower tax rates may find opportunities for reinvestment. However, each sector will experience these impacts differently, and the ability to pivot quickly will be key to maintaining stability and competitiveness.
For many small businesses, innovation will be critical to navigating Trump’s regulatory and economic agenda. Advances in technology, particularly in artificial intelligence, offer significant promise for small businesses aiming to streamline operations, improve customer engagement, and manage costs more effectively.
By investing in digital tools and exploring automation, small businesses can find ways to counterbalance rising costs or labor shortages. Moreover, Trump’s emphasis on supporting U.S. innovation may create an environment where small businesses can access emerging technologies to enhance productivity, making them more competitive in both domestic and global markets.
Ultimately, while some policies may bring immediate advantages, others could introduce long-term complexities that require strategic adaptation. Business owners should keep a close watch on legislative updates and engage with professional advisors to remain proactive.
By staying informed and open to new solutions, America’s small businesses can position themselves to thrive in this new era, ensuring they continue to play a vital role in the nation’s economy. With flexibility, innovation, and careful planning, they can navigate Trump’s policy landscape and capitalize on new opportunities for growth.
