One second Donald Trump the administration will likely have a huge impact on area small business owners – with potential effects both positive and negative. Here’s how Trump’s proposed tariffs, taxes, regulatory relief and spending could affect small businesses across different sectors.

Taxes

Many provisions of the Tax Cuts and Jobs Act of 2017 are set to expire by the end of 2025. It was a signature piece of legislation in the first Trump administration and the president-elect committed to extending or making permanent most, if not all, of its provisions. its provisions.

One of the main stipulations that will expire is the Tax deduction on qualified business income. This currently allows eligible owners of “pass-through” entities, like partnerships and S corporations, to deduct up to 20% of their business income before it is “passed through” on their tax returns individual. Business owners who run C corporations also face tax rates that rise from the current 21% to 28%.

Business owners who take the $29,400 standard deduction on their jointly filed individual tax returns should benefit from this deduction. cut in half. First-year deductions for research and development expenses have already expired, and other incentives for investing in capital goods – like machinery, furniture and technology – have also been reduced. Deductions related to estate taxes and state and local taxes are also on the table.

The fate of these provisions will have a direct impact on taxes paid by small business owners, which are among their largest expenses.

Prices

In May, the Biden administration increase in prices on certain products from China, including levies of up to 25% on steel, aluminum, batteries, critical minerals and ship-to-shore cranes, and up to 50% imposed on cells imported solar panels.

President-elect Trump has pledged to further increase all prices on imports from China up to 60%, and impose a 10% customs duty on all other imports.

The impact of tariffs been heavily debated. Supporters say raising tariffs protects prices, creates and protects jobs and generates more federal tax revenue. Opponents fear that tariffs could negatively impact competition by benefiting some industries over others, incite retaliation from targeted countries and – probably most importantly – raise prices and fuel inflation.

Small business owners who sell or purchase products using imported materials would be most affected, and this applies to all sectors.

Other companies that have been negatively impacted by lower prices from their foreign competitors could benefit from increased tariffs.

Regulations

Some industries – energy in particular – will benefit from a likely rollback of environmental regulations on drilling.

More important for small businesses is a likely slowdown, or even reversal, of significant workplace policies enacted this year by the Biden administration.

For example, the Ministry of Labor issued new rules regarding worker classifications this required more employers to classify independent contractors as employees, which therefore resulted in additional tax and benefit costs. The same department also revised its overtime rules so that, by the end of this year, eligible workers currently earning up to $58,656 will be eligible for overtime pay (at the start of the year, this amount was $35,568).

The Equal Employment Opportunity Commission also released new rules making employers more accountable for the behavior of their employees, both in and out of the office, particularly if that behavior is likely to create a hostile work environment.

Lawsuits have already been filed against these regulations, and more are expected. The Trump administration is not expected to defend these regulations, so it may return to the way it was before the president. Joe Biden took office.

Within the EEOC, commission members’ terms expire each year, and if the trend of his first term continues, the Trump administration is unlikely to fill those seats, leaving the commission virtually toothless.

Expenses

According to some economistsPresident-elect Trump’s spending and tax plans could increase our already high national debt by as much as $7.75 trillion. The US national debt now stands at $35.9 trillion.

Increasing the nation’s national debt in this manner without significant changes in federal government revenues or spending will put more pressure on the Federal Reserve to increase our money supply, leading to higher inflation and interest rates. students.

Jerome Powell, Chairman of the Federal Reserve said he would not resign if Trump asks him to, and Trump cannot fire him under the law.

Even with the recent cuts, interest rates remain historically high and inflation is above the Fed’s target.

Impact and sentiment on the industry

Since taking office, Biden has seen a significant decline in small business sentiment and optimism, as measured for more than 50 years by the National Federation of Independent Business.

As happened during Trump’s first term, confidence could reach historically high levels. Small businesses employ more than half of this country’s workers and represent 44% of American economic activityaccording to the U.S. Small Business Administration. More optimistic sentiment could help increase investment and hiring.

Some sectors that dominate Philadelphia’s economy, such as health care and education, could experience significant disruption if President-elect Trump implements policies aimed at ending the federal Department of Education, curbing this which he considers to be left-wing tendencies in universities and to curb this tendency. healthcare pricing.

Other important sectors in the region, such as financial services, manufacturing and construction, could benefit from looser oversight, protective tariffs and reduced workplace regulations.

But because Philadelphia politicians, mostly Democrats, have opposed his candidacy, Trump will likely withhold federal support for investments in local public infrastructure or other local initiatives in which small businesses participate.