Trump 2.0 & Manufacturing: What to Expect

Following a tumultuous election cycle, Donald Trump is now set to take office for a second, non-consecutive term in 2025, leaving manufacturers to wonder: how will a second Trump Administration impact my business?

Strengthening the nation’s manufacturing sector has been a cornerstone of both Trump’s candidacy and his former time in office. All signs are still pointing to the same strong focus on protectionist policy, corporate tax relief, workforce development, and deregulation to strengthen U.S. manufacturing resilience—with a few key differences. Let’s take a look:

Tax Policy

Summary

• Trump aims to keep the 21% corporate tax rate, potentially reducing it further to 20%.
• A new 15% “Made in America” tax rate is proposed to incentivize U.S.-based manufacturing.
• He plans to extend cuts to individual and estate taxes, benefiting business owners and investors.
• Business groups welcome the policies, though some analysts warn of potential federal deficit impacts.

The 2017 Tax Cuts and Jobs Act, enacted during Trump’s first term was a whopper of a tax break for U.S. businesses, significantly lowering the corporate tax rate from 35% to 21%.This reduction was intended to stimulate investment and expansion in the manufacturing sector by increasing after-tax profits and encouraging companies to reinvest in their operations. Notably, the Biden Administration retained the 21% tax cut—though it was set to expire in 2025.

Moving forward, Trump aims to maintain this 21% corporate tax rate beyond its 2025 expiration and is considering further reducing it to 20%. Additionally, he plans to maintain reductions in individual and estate taxes, which could further benefit business owners and investors.

But here’s the most notable development for U.S. manufacturers: a key component of Trump’s proposed tax policy is the introduction of a 15% “Made in America” corporate tax rate. This lower rate is designed to incentivize companies to keep production and jobs within the United States. By offering a significant tax break to domestic manufacturers, Trump hopes to bolster the U.S. manufacturing sector, reduce dependency on foreign goods, and create more American jobs, aligning with his broader “America First” agenda, which prioritizes domestic economic growth and self-sufficiency.

Reactions from manufacturers and the business community to these proposed tax policies have been largely positive, though not without some concerns. Many business leaders and industry groups have praised the continuation and potential expansion of the tax cuts. For instance, the National Association of Manufacturers (NAM) has expressed strong support for maintaining the 21% corporate tax rate and the introduction of the 15% “Made in America” rate, arguing that it will enhance the competitiveness of U.S. manufacturers, encourage investment, and drive economic growth.

However, there are also voices of caution within the business community. Some economists and financial analysts warn that further tax cuts could exacerbate the federal deficit and lead to long-term fiscal challenges..

Trade Policy

Summary:

• Impose a 60% tariff on Chinese goods and 10-20% tariffs on other imports.
• Apply up to 200% tariffs on vehicles imported from Mexico.
• Expand Buy America policies to prioritize domestic goods in government procurement.
• Encourage domestic manufacturing through tariffs and reduced foreign dependency.

President-elect Trump’s “20 Core Promises” calls for the U.S. to “Stop Outsourcing and Turn the United States into a Manufacturing Superpower.” To this end, Trump is expected to double down on his protectionist trade policies, which were a hallmark of his first term. During his previous administration, Trump imposed tariffs on $200 billion worth of Chinese imports, aiming to boost U.S. manufacturing by making foreign goods more expensive and less competitive. These measures led to significant trade conflicts with China, impacting various manufacturing sectors differently. Some industries, such as steel and aluminum, saw benefits from reduced competition, while others, particularly those reliant on imported components, faced increased costs and supply chain disruptions.

Looking ahead, Trump plans to throw more muscle into U.S. trade policy, with plans to impose a 60% tariff on Chinese goods, 10-20% on other imports, and up to 200% on vehicles from Mexico. While these measures are designed to further reduce dependency on foreign products and encourage domestic production, the potential for increased costs and retaliatory tariffs from other countries, such as we saw in 2018:

Not surprisingly, reaction from business leaders has been mixed. Some industry leaders, particularly those in sectors that have historically benefited from protectionist measures, are optimistic. The Alliance for American Manufacturing, for instance, expressed hope that Trump’s policies will prioritize American manufacturing jobs and support strategic investments in industry and infrastructure.

“We hope that American manufacturing jobs will be a priority,” said, Scott Paul of the Alliance for American Manufacturing in response to Trump’s win. “That means a continued strategic application of tariffs; smart investments in industry, innovation, and infrastructure; expanding Buy America procurement policies and tax rules to spur domestic production; and boosting apprenticeships and worker training programs.”

On the other hand, many business leaders are concerned about the broader economic implications of such aggressive trade policies. Retailers and manufacturers that rely on imported goods are particularly worried about the impact on their supply chains and overall cost structures. And it shows with companies now scrambling to expedite their imports to the U.S. before Trump takes office.

“This is 2018 all over again,” said Paul Brashier, Vice President of global supply chain for ITS Logistics. “The calls expand beyond shippers who have Chinese imports. The global tariff threat is fueling calls for frontloading from all around the globe.”

Deregulation & Energy

Summary:

• Plans to cut environmental regulations, easing compliance for manufacturers.
• EPA rollbacks aim to lower costs but raise environmental concerns.
• Reduction in clean energy support could favor traditional energy sectors.
• Expansion of domestic oil and gas production aims to lower energy costs for U.S. industries

In his second term, Trump is expected to continue an aggressive push for deregulation—a hallmark of his first term. This approach is aimed at reducing the regulatory burden on businesses--particularly in the manufacturing sector, to stimulate economic growth and competitiveness.

One of the primary areas of focus is environmental regulations. Trump has consistently argued that stringent EPA regulations on emissions and waste management stifle business innovation and increase operational costs and indeed rolled back more than 100 environmental rules during his first term. By rolling back these regulations, manufacturers could see reduced compliance costs and faster project approvals. But, as with his first term, this move continues to spark debates about the long-term environmental impact and public health concerns.

In addition to these areas, Trump is expected to scale back support for clean energy initiatives. This includes ending the electric vehicle mandate and reducing subsidies for renewable energy projects. For manufacturers involved in green technology and sustainable practices, this could mean a shift in focus and potential challenges in maintaining momentum towards sustainability goals. However, it could also open opportunities for traditional energy sectors and related manufacturing industries.

Looking ahead, Trump’s energy policy prioritizes traditional fossil fuels like coal, oil, and natural gas, aiming to establish “energy dominance” by significantly increasing domestic production. The policy involves rolling back various environmental protections and allowing expanded access to public lands for drilling and mining activities, with a vision to make the U.S. a leading global energy exporter.

Workforce Development

Key Strategies:

• Expand vocational training to all high schools.
• Connect workers with businesses through the National Council for the American Worker.

For years now, manufacturers have been grappling with a persistent skills gap. In his second term, Trump plans to continue to address this gap with a focus on workforce development. One of the central elements of his plan is the expansion of vocational training and apprenticeship programs. Trump has called for vocational training to be available at every high school in America, aiming to equip students with practical skills that align with the needs of modern industries. This initiative is designed to address the skills gap and ensure that young people are prepared for high-demand jobs in sectors such as manufacturing, technology, and skilled trades.

Trump’s workforce development strategy also includes the continuation of the National Council for the American Worker, which was established during his first term and replaced by the Biden Administration with the Task Force on Worker Organizing and Empowerment. This council is tasked with developing a comprehensive workforce strategy, leveraging data to connect workers with businesses and educational institutions. The council’s efforts are supported by the “Pledge to America’s Workers,” a commitment from over 400 companies to provide nearly 15 million job and training opportunities. This pledge aims to foster private-sector investment in workforce development and create pathways to well-paying jobs for American workers.

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