Many business leaders should start thinking about how the new Trump administration will impact their business. This article isn’t about who you should have voted for, but about what issues should be on the business leader’s radar screen.

Candidates from both parties make many promises that they fail to keep. Sometimes they forget their promises, sometimes they fail to get buy-in from Congress, and sometimes they take actions that don’t produce the desired results. So take all campaign talk with skepticism. President Trump, in particular, floats ideas before a detailed analysis or implementation plan has been developed. His campaign statements should not be taken literally, although we can learn much from his recurring themes.

Prices

Businesses that purchase products manufactured abroad or sell goods to foreign buyers should monitor tariff changes. Many tariffs can be changed by the president without Congressional approval.

THE The United States steadily lowered its tariffs after World War II, until Donald Trump’s first term. Its tariffs were targeted: most imports were unaffected. But steel and aluminum from China have been hit hard, along with a number of other products. Other countries responded by imposing tariffs on U.S. sales to these foreigners. After President Trump left office, the Biden administration maintained most of Trump’s tariffs.

Manufacturing companies use global supply chains. For example, the country an automobile is assembled in doesn’t tell you anything about where the transmission or airbags were manufactured. The country that ships the most cars to the United States is… Mexico. But many cars are assembled in Mexico with parts from the United States and other countries. So it’s complicated.

Even though Trump has talked about massive tariffs, he won’t set huge tariffs and then turn his attention elsewhere. He is a negotiator, a negotiator. He believes this is his strength. So expect its strategy to be focused, but broader than eight years ago. Then he will negotiate a deal and cut back somewhat. But by the end of his term, prices will be higher. The effect is that buyers of manufactured goods and agricultural products will pay more and the increased costs will have to be passed on to customers. Raising tariffs will not kill the economy, but it will certainly be a negative factor.

Immigration and work

Businesses that employ low-skilled workers should monitor changes in immigration policy.

Before the Trump presidency, net immigration averaged about a million people. Under Trump, immigration has declined. Then the Biden administration relaxed rules for refugees seeking asylum. Net immigration has increased sharply under the Biden administration. In round figures, net foreign immigration increased from one million to three million per year.

National employment gains in recent years have been made possible by this immigration. Some immigrants obtained work permits, others worked without permits. The economic impact was perceptible. Employers found workers and new workers spent money.

With fewer immigrants, businesses will have a harder time hiring people for low-skilled jobs. This will limit economic growth but will not reduce activity. Companies planning to use advanced technologies in place of low-skilled workers should accelerate their plans.

Environmental and Climate Regulations

The administration has broad discretion in environmental and climate regulations. President Trump wasn’t much of a deregulator in his first administration, but he significantly slowed the growth of new regulations. The second Trump administration will likely slow down climate-related regulations and allow more energy production and transportation.

The range of possible changes is quite wide. Few new regulatory initiatives will be launched, but the withdrawal of existing rules generally requires lengthy processes. Businesses should not expect dramatic setbacks. Instead, they will discover that their worst fears about future changes will not come true.

Taxes

President Trump will almost certainly keep in place the corporate tax cuts he implemented in 2017 – it would take congressional action to end them. The personal income tax changes that Trump pushed through are up for renewal next year, and that seems very likely.

In some of his campaign speeches, Trump has talked about changes that seem highly unlikely to be implemented, like making tips and Social Security tax-exempt. Reviving unlimited state and local tax (SALT) deductions has been discussed, but in the past some Republicans have viewed the limit as a way to punish high-tax liberal states. He could push to make accounting for companies’ equipment purchases permanent, which would boost capital spending to some extent.

It’s far too early for businesses to consider changing tax laws, but it makes sense to keep an eye on the news.

Overall impact

The new president’s policies will likely slow economic growth slightly. Long-term average GDP growth is around 2% (inflation adjusted). The impact of immigration restrictions would reduce our capacity to grow by one or two tenths of a percent. Tariffs would raise prices, but through a one-off effect rather than through persistent inflation. Easing environmental and climate regulations would slightly boost economic activity. The net effect of these policies will be barely perceptible to most companies, overwhelmed by routine changes in the competitive environment. However, some businesses will find challenges (and opportunities) in the coming changes.