How To Plan For The Unknown And Expect The Unexpected
Americans are witnessing rapid legislative and policy changes since President Donald Trump began his second term. These swift actions have led to significant uncertainty and challenges for those in the manufacturing space. This article will review a few key topics that are top of mind for those in the manufacturing industry.
Taxes
Many manufacturers generally support lower corporate tax rates to promote industry growth. Throughout the next several months, debate on the topic of tax reform will be a priority.
During his first term, Trump passed the Tax Cuts and Jobs Act (TCJA) and has repeatedly said he will work to make key provisions of the law permanent while working to further reduce the corporate tax rate. With many TCJA provisions set to expire at the end of 2025, Trump is likely to focus on tax policies, including:
- Expanding tax breaks for households, small businesses, and corporations
- Exempting tips, overtime pay, and Social Security benefits from income taxes
- Restoring state and local tax deductions
- Permanently lowering individual and estate tax rates
- Increasing tax incentives for domestic vehicle manufacturing
- Repealing tax incentives included in the Inflation Reduction Act, particularly the increased coal excise tax and credits for electric vehicles, while increasing tax breaks for producers of oil, gas, and coal.
Trade
Manufacturers in Ohio are sensitive to the rising costs of doing business while maintaining profitability. In addition to challenges related to labor and healthcare costs and tax obligations, inflation and tariffs on imports are resulting in uncertainty. However, American manufacturers are also hopeful that an “America First” trade approach will pay off through incentives targeted at domestic manufacturers.
As of the date of publication, the use of tariffs on Canada, Mexico, and China are being used as bargaining chips by the Trump administration. While there appear to be plans in place to impose tariffs, negotiations are underway between the countries and America to delay implementation. American manufacturers are in support of policies that would promote a level playing field in international trade with minimal volatility, however many are at risk due to the connectivity of the global economy.
Read Also: Tariffs and Trade Taking Center Stage In New U.S. Administration
Technology
Technology continues to be an area of significant focus for manufacturers. Cyber security threats continue to loom, cause significant interruptions and lost production time, and create reputational harm. Balancing risk, however, manufacturers continue to be at the forefront of seeking out and evaluating new tools and AI functionality to improve processes and drive organizational efficiency and profitability.
The new administration appears to have a vastly different approach to how the United States should advance technology, including within manufacturing. Trump has said he will repeal Former President Joe Biden’s AI executive order in the interest of expressing support for AI development and innovation founded on the promotion of free speech while helping America gain a competitive edge.
Read Also: What Comprises A Vulnerability Management Program?
Regulation
Here in Ohio, many manufacturers say they are in support of reasonable levels of regulation to protect citizens and businesses. However, manufacturers cite expanded employee leave and unemployment benefits, select OSHA requirements, workers’ compensation mandates, hiring and safety concerns related to the legalization of marijuana, environmental compliances, and others as burdensome to business. The Trump administration will likely support deregulatory policies and efforts to simplify regulations for American businesses.
Read Also: Safeguarding Manufacturing Operations
Workforce
Challenges continue surrounding finding and maintaining a skilled workforce. Ohio manufacturers say they are concerned with their businesses’ sustainability, specifically their ability to replace retirees while continuing to meet increasing demands. At the national level, we are already watching as the administration puts policies into place regarding legal and illegal immigration into America. It’s too soon to tell if the combination of these efforts will help manufacturers in Ohio overcome their significant workforce challenges, but we do know that business leaders are open-minded when it comes to initiatives that will help them attract, retain, and develop their workforce.
Plan For Uncertainty
We are only a few months into a new year and a new presidency. It’s too early to make any predictions about how efforts being made by Trump will affect Ohio’s manufacturers. If your business needs help navigating policy, legislation, and initiatives in real-time, contact a member of GBQ’s manufacturing services team for assistance and insight. We will work with you to identify solutions to help protect your organization while promoting the long-term stability of your business.
By Mike Purcell, Director, Assurance & Business Advisory Services
Looking for additional insight to help safeguard your manufacturing business? Check out these resources:
Year-End Audit Essentials: GAAP Checklist
Improving Financial Application Security: Key Trends And Recommendations
When (And When Not) To Break The Rules In Business
