Several policy initiatives in the first months of the Trump Administration have caused economic uncertainty affecting businesses. Some have reached closure like the One Big Beautiful Bill Act (H.R 1), which is a positive for IHA members, but tariffs continue to be a thorny issue.
The velocity of tariffs imposed by President Trump on nearly all countries has obviously caused supply chain disruptions for many American businesses. But the moratorium on higher reciprocal tariffs until July 9 for most countries and August 12 for China may have calmed things down a bit. There is also a question as to whether President Trump’s International Emergency Economic Powers Act (IEEPA) reciprocal and fentanyl tariffs are legal pursuant to a May 28 U.S. Court of International Trade ruling that they must stop.
The three-judge panel ruled unanimously that IEEPA did not grant unbound authority to tax imports from nearly every country in the world, but an appeals court reinstated the tariffs while the lawsuit proceeds. However, while this was happening, President Trump raised steel and aluminum tariffs to 50% from 25% on May 30 under Sec. 232 of the Trade Expansion Act of 1962, and he also abruptly stopped trade talks with Canada on June 20 over Canada’s new digital services tax which caused Canada to quickly drop the tax.
Business uncertainty could also be stoked by the Trump Administration’s aggressive deportation policy for illegal immigrants if not done in a targeted manner. Originally aimed at those individuals with criminal records, Immigration and Customs Enforcement (ICE) raids have broadened to keep pace with the White House’s goal of 3,000 arrests per day.
In addition, there is growing anxiety in the business community over what to expect from the U.S. Dept. of Labor and National Labor Relations Board regarding labor relations policies. For example, in a surprise move, the Office of Management and Budget issued a memo in June keeping the Biden-era mandate to use Project Labor Agreements for large federally funded construction projects.
On a positive note, the passage of H.R. 1, which extends and, in some cases, enhances provisions of the Tax Cuts and Jobs Act (TCJA), should bring more certainty for business planning. Key sections for IHA members are the Sec. 199A deduction for pass-throughs is made permanent; the Sec. 168(k) 100% bonus depreciation is restored for 20-year depreciable items; the Sec. 179 expensing cap for 37-year depreciable items rises to $2.5 million if made in or after 2025 and the phase-out starting point is upped to $4 million; the Sec. 174 immediate expensing for research and development (R&D) is restored; and the estate tax exemption is raised to $15 million and made permanent.
Another positive outcome for the White House concerns efforts to rein in a growing number of nationwide policy injunctions from federal district courts. The Administration’s legal campaign reached closure when the U.S. Supreme Court essentially ruled against them on June 25. This issue had gained prominence with the proliferation of nationwide injunctions causing confusion for many Administration policies. In its 6-3 decision the Supreme Court limited the power that federal district courts can exercise over Executive Branch prerogatives, thus bringing more business certainty regardless of who sits in the Oval Office.
