What Trump’s second term could mean for cross-border businesses

Trump will need to work with Congress to enact lasting change on many of these issues — he will benefit from Republican control of both chambers for at least the first two years of his term. The Republican-controlled Senate will enable a smoother and swifter path to confirmation of Cabinet and other high-level political appointees (where a simple majority is needed) and thus a potentially quick start to implementing his policy agenda.
 

Republican control of the White House and Congress also could allow for more sweeping legislative change. Importantly, with respect to tax policy, congressional procedures allow for passage by a simple majority in the Senate.

Quick take: Trump’s approach to six key issues

1. Tax:

Expiration of many provisions in Trump’s signature 2017 Tax Cuts and Jobs Act (TCJA) will drive the debate in Congress early on — on the campaign trail Trump supported a TCJA extension and an even lower corporate rate for some domestic manufacturers at 15%. The US approach to ongoing global debates on issues such as a global minimum corporate tax also is likely to change with the new administration. Republicans generally oppose signing on to a global minimum tax. Executives should engage in tax planning to manage any business and market risks that emerge from tax policy changes.

2. Trade and supply chains:

Trump’s second-term trade agenda will be driven by an “America First” posture and policy — prioritizing domestic manufacturing and onshoring efforts and broadly using tariffs to achieve a variety of domestic and international policy objectives. In addition to tariffs, Trump is expected to restrict certain exports to and investment in China and possibly other competitor countries to limit perceived economic and national security threats. Executives will need to monitor tariff and other trade policy changes closely and consider adapting their supply chain strategy accordingly.

3. Technology:

Technology, particularly artificial intelligence (AI), remains an important policy issue in Washington. Trump’s technology policy is likely to depart from President Joe Biden’s approach in many areas, including a greater emphasis on free speech and US innovation. His policy approach also is expected to center on seeking to establish a US edge against global competitors. Executives should assess their company’s global digital footprint and determine whether there is a need to develop multiple technology structures for different markets.

4. Regulatory environment:

Recent presidents of both Democratic and Republican parties have increasingly relied on executive powers to make policy, causing pendulum swings in regulation. This trend is expected to continue with Trump’s second term. We expect a new set of regulatory priorities and a “lighter touch” regulatory environment, including for the oil and gas, financial services and crypto industries. Antitrust, however, is one area that may have uneven outcomes with the Trump administration, with “Big Tech” potentially receiving continued scrutiny.

5. Climate and environment:

Trump’s second term is likely to mirror his first term on climate and environmental policy. He is expected to reverse Biden’s energy initiatives and focus on increasing domestic energy production from more traditional fuel sources. The administration is likely to withdraw the US from major global climate efforts and to roll back the Securities and Exchange Commission’s (SEC) climate disclosure rule. Executives should closely monitor climate policy changes to manage potential risks associated with cross-border interoperability for companies with global operations.

6. Workforce:

On labor, diversity and inclusion, and other workforce issues, Trump will generally seek to halt or undo the Biden administration’s rulemaking and policies, and seek to reshape the federal workforce. On immigration, Trump is expected to use executive authority and regulatory and administrative processes to alter, reorient and slow the overall US immigration system, which could create a challenging, costly and uncertain environment for both businesses and individuals that rely on and interact with the system. Companies should assess whether their international mobility and broader workforce strategies will need to adapt to this new policy environment.