As election day nears, businesses are bracing for the potential impacts from either Donald Trump’s or Kamala Harris’s triumph. One industry in particular that’s posed to experience the most significant impacts is the manufacturing and distribution industry. That’s because major ticket issues like climate change, tariffs, and supply chain regulation all heavily influence businesses in this space.
For this reason, ahead of November 5, manufacturing and distribution (M&D) enterprises must prepare for either outcome to ensure they can remain successful amidst changes. Below outlines some of the major, highly disputed topics set to impact the industry and how each candidate plans to approach the issue in their potential presidencies.
Corporate Taxes
Corporate taxes remain one of the most polarizing issues between both candidates. While Harris is seeking a rise in corporate taxes to as high as 28% and higher taxation on capital gains and stock buybacks, Trump has promised to lower the corporate tax rate to 15% on domestic production.
Harris’s approach was created in the interest of tax fairness, meaning she aims to introduce higher tax minimums for large corporations, while creating more tax deductions for small businesses. This includes proposing an increase in tax deductions for startup businesses from $5,000 to $50,000.
However, because of this approach, manufacturers may experience reduced after-tax profits and less available funds for reinvestment. Distributor growth may slow as well, given these businesses often operate on thin margins. Impacts would be even more significant if Harris discontinues the Tax Cuts and Jobs Act (TCJA) upon its expiration in 2025, as she has indicated. However, she has pledged to refrain from increasing taxes on individuals that make less than $400,000 a year, regardless of that decision.
On the other hand, Trump’s tax policy places a heavy emphasis on incentivizing M&D corporations to bring production back to domestic soil. This includes expanding tax credits for domestic manufacturing and introducing incentives for capital investments on equipment and infrastructure upgrades. He also aims to streamline the permitting process from expansion and modernization projects across the industry.
These policies would result in higher after-tax profits and more capital available for reinvestment and expansion.
Climate Change
While climate change has continued to be a cornerstone of the Harris campaign, Trump has taken a deregulatory approach to the issue.
Harris’s presidency could mean an accelerated shift toward renewable energy and expanded corporate regulations to reduce carbon emissions and strengthen environmental protections. For M&D businesses, this could mean stricter emissions regulations, carbon taxes, and supply chain sustainability orders – all of which may increase compliance costs for industries that utilize fossil fuels.
However, the administration plans to offer incentives to embrace green technology, including offering financial motivations for utilizing renewable energy and clean technologies across the business and supply chain.
On the other hand, Trump wants to withdraw some of the government’s oversight on corporate environmental practices and initiatives. He has proposed a reversal of environmental regulations that add compliance burdens to businesses, which would in turn lower costs for manufacturers and distributors. However, this approach would not support the ongoing reduction of harmful carbon emissions.
Labor Rights
Having come from working class beginnings, Harris is a staunch supporter of labor rights. She has proposed raising the federal minimum wage to $15 or higher, strengthening union rights and expanding paid family leave and healthcare protections for workers. While these policies protect the working class, they pose significant increases in labor costs and payroll expenses for M&D businesses. This may lead to an increased reliance across the industry on technology and automation to replace workers for menial or repetitive tasks.
On the other hand, Trump advocates for business protections when it comes to labor laws. He has proposed loosening existing laws to provide employers with flexibility in hiring and managing their workforce. However, his foreign trade policies seek to bring more jobs back to America to provide more opportunities for the domestic workforce.
Foreign Trade Policies
As mentioned above, Trump has put a particular emphasis on bringing manufacturing back to the U.S. To support this effort, he has proposed significant tariffs and trade barriers to incentivize M&D companies to cease overseas sourcing and production. These include increasing or enacting tariffs on goods from overseas, including countries like China. He has proposed a 20% tariff on all overseas imports, and a tariff of 60% for goods from China, specifically.
While incentives will be offered to companies that move production back to the U.S., these tariffs are expected to significantly raise costs for businesses that utilize imported goods and weaken the global supply chain. Some fear that the added costs for distributors that handle international goods will also lead to price increases for consumers.
While Harris has opposed major international trade deals herself in the past, she has largely accepted international trade as a necessary function of the economy. However, she does believe in enforcing the same worker and environmental protections within international trade agreements that she plans to implement across the M&D industry in the U.S.
What to Expect
While the prospect of these policy changes can be unnerving no matter what the outcome of the election determines, business owners may not need to worry about any major impacts to business in the short term. Should the election result in a split Congress, the rate of any legislative change will slow significantly as policy reforms are stalled. Any regulatory changes, specifically around labor and environmental policies, would face several hurdles as they are challenged in the courts.
No matter what, it’s critical to know how the election outcome may impact your M&D business and to plan accordingly for either outcome. Working with a financial partner can ensure that you fully understand your compliance expectations come 2025 and make the process of adapting to a new Commander in Chief go smoothly.
