Manufacturing Issues to Watch Under the Trump Administration
In the wake of former President Donald Trump’s reelection, industry leaders across the country are preparing for potential changes the new administration could bring.
During his campaign, Trump frequently emphasized his plan to raise tariffs as a strategy to boost U.S. manufacturing by encouraging domestic production.
Trump also discussed his preference for reducing federal funding for clean energy and semiconductor production, marking a shift from the Biden administration’s focus on these sectors.
As President-elect Trump begins unveiling his transition plans, here are four manufacturing issues experts say could be most impacted by the incoming administration.
- Tariffs
Trump has consistently expressed his intent to raise tariffs, including a potential 10% tariff on all imported products and up to 60% tariffs on goods from China. The goal is to incentivize domestic production and reduce reliance on foreign imports.
Sanjay Patnaik, a senior fellow at the Brookings Institution, noted that while tariffs could encourage local manufacturing, they may also increase costs for manufacturers that depend on imported components.
“Higher tariffs could lead to increased costs for certain products, which may have implications for pricing,” Patnaik said. “The key question is how these policies will be implemented and how businesses will adapt.”
Willy Shih, an economist at Harvard Business School, pointed out that while tariffs can protect certain industries, there is also the potential for other countries to impose retaliatory tariffs.
“Historically, trade partners often respond with their own measures, which could impact U.S. exports,” Shih said. “The situation will likely evolve strategically, with countries assessing their best responses.”
Shih added that there might be unexpected developments as Trump finalizes his tariff strategy. - Taxes
The new administration is expected to extend the benefits of the Tax Cuts and Jobs Act, passed during Trump’s first term, which are set to expire in 2025. Andrew Wronski, chair of law firm Foley & Lardner’s manufacturing sector, highlighted that this could include continuing the expensing of research and development work, extending the 100% bonus depreciation, and potentially lowering capital gains taxes.
“These measures have been favorable for manufacturers, providing opportunities for reinvestment,” Wronski said. “With the extension of these benefits, businesses may continue planning for long-term growth.”
Sanjay Patnaik added that he anticipates a business-friendly approach from the new administration, particularly if Republicans gain a majority in Congress.
“Similar to traditional Republican policies, we might see lower taxes and a pro-business stance,” Patnaik said. - Regulation
Andrew Wronski suggested that the Trump administration may reduce regulatory oversight, including potential changes to industrial emissions rules from the Environmental Protection Agency.
“There could be adjustments to regulations related to labor relations, overtime pay, and independent contractor rules,” Wronski said. “These changes may be viewed by manufacturers as positive steps toward fostering domestic production.”
Wronski also noted potential shifts in policies from the National Labor Relations Board and the Federal Trade Commission, which could create a more favorable environment for businesses. - Energy
The Trump administration is likely to focus on increasing domestic energy production and lowering energy costs, which could benefit manufacturers by reducing operational expenses.
Trump has indicated plans to roll back certain national clean energy targets implemented by the previous administration, including vehicle emission standards and EV adoption goals.
The President-elect has also discussed the possibility of reducing EV tax credits under the Inflation Reduction Act.
“If implemented, these changes could benefit certain segments of the manufacturing sector by reducing costs and encouraging reshoring of production,” Wronski noted.
Conclusion
The Trump administration’s approach to manufacturing may involve significant shifts from previous policies, particularly in areas like tariffs, taxes, regulation, and energy. While some industry experts express concerns about potential challenges, others see opportunities for growth and increased domestic production. As the new administration takes shape, manufacturers will be watching closely to see how these policies are rolled out and their impact on the industry.
Source: SupplyChainDive.com