Inauguration day has passed, and Trump is working to get his cabinet appointments as quickly as possible. No matter who you support this election cycle, 2025 promises to be an interesting year. Whenever we see a change in management, we also see market changes as investors react. Businesses must evolve as the state and national landscape changes. What does this mean for businesses today? There will be both challenges and opportunities ahead. In this article, we will share our financial forecast as we enter 2025.
Even if there are majorities in the House and Senate, the new President will not be able to stop the proposed policies immediately. His big campaign promises will take time to materialize but, when and to what extent they do, they will have a big impact on business at home and abroad. It’s too early to tell how far he’ll go in achieving his goals, but it’s never too late to prepare for a change. Building flexibility into your company’s financial portfolio is a smart move. Even smarter is working with your dealer to identify target areas for diversification and risk protection.
First, let’s go over some of the changes we’ll be looking at throughout the first quarter of the year. We will then explore how these policy changes can impact your company’s fundraising and fundraising strategies.
Immigration to another country
The President ran on a platform of tough immigration policy, promising to build a border wall and force mass deportations. Besides the direct costs associated with immigration policies, mass deportations will have an impact on the labor market.
For businesses, this means that employee engagement is a priority. Businesses that have the money to attract and retain high-quality team members will be well positioned in the new competitive environment.
Costs
During his campaign, the president proposed a 25% tariff on goods from Canada and Mexico, based on the claim that the demand for illegal drugs in the US is driven by smuggling across these borders. Trump wants to keep the tariffs until these countries are able to stop the flow of drugs.
Oil and other petroleum products cross the Canadian border at several million gallons a day. Taxes will likely limit this supply of energy to some extent. Oil and gas will likely increase exploration in the US, and jobs can be created in that sector, but it takes time to increase production and generate revenue through the long process from extraction to final product.
Canada and Mexico are not the only countries targeted for taxation. China would see the highest, receiving a 60% tariff on Chinese exports. American retailers and manufacturers will have to figure out how to handle price adjustments.
Will the additional costs be passed on to sellers and buyers, or accepted as new costs of doing business and reducing profit margins? Or will the collapse lead to a new market for American-made goods and raw materials? With each of these options, companies with purchasing power negotiate price, buy in bulk, and buy from multiple suppliers to maintain a strong competitive advantage.
Health care
There is every indication that Trump will shake up health care policy in his second term. In contrast to the majority of deregulation elsewhere in his administration, he is likely to make new changes to health care funding, Medicaid, and immunization laws.
Other policy changes could promote drug transparency and competition, which could lower drug prices. Medical technology companies could also see a benefit in the form of reduced federal oversight development, which has led to some of the costs of innovation in health care. The shift to a home supply chain may also contribute to higher costs for hospitals and providers.
The weather
Trump has been vocal in his opposition to Biden’s environmental laws and climate policy. He also supports increasing oil and gas production. While it is unlikely that we will see a complete overhaul of all forms of renewable energy, the new administration can take several steps, such as cutting EPA funding, blocking environmental justice efforts, and withdrawing from the Paris Agreement.
Government deregulation like this would leave the road open for states, cities and business leaders to pursue their own climate policies. Opportunities can also be found in several bipartisan bills such as the Carbon Removal and Efficient Storage Technologies Act (CREST) and the Concrete Asphalt Innovation Act, which could increase competition for low-carbon products and open up opportunities for industry growth.
Deregulation may have a positive impact on energy costs and operating costs, but the scale of change has yet to materialize.
Finance & Capital Sourcing Strategies
Much remains to be seen as the regulatory environment continues. We are entering uncharted territory with many shakeups throughout. Given this uncertainty, the best way to stay strong as you move into a new administration is to ensure that you have flexible and quick access to funds.
In many industries, business leaders are preparing to adapt. We do not know when or to what extent these changes will affect the market, but we do know that businesses that are not ready to change may face a significant downturn. Quick, flexible access to capital is essential to respond to changes in the market.
That often means obtaining financing such as lines of credit and financial vehicles that accelerate cash flow such as invoicing, purchase orders, and contract accounting. Flexible capital provides the means to quickly implement new business strategies, whether it’s hiring contingent workers, changing your store product mix, or covering temporary increases in energy costs.
Here are some examples of how access to flexible financing can help a business gain a competitive edge in the market:
Staff Changes: If changes in immigration policy were to suddenly reduce the size of the farm workforce, that farm may need to be rehired to become fully operational. If this were to happen during harvest and the farm could not get enough money to immediately hire more local workers, it would lead to a loss of that year’s harvest and a decrease in production. Having flexible financing solutions already in place to enable quick access to capital to re-employ workers, as well as cover other variable costs.
Changing Needs: If higher prices can suddenly increase the demand for American goods, the US manufacturer may have an opportunity to quickly win new contracts with retailers. However, if that manufacturer cannot access the funds needed to purchase additional raw materials, hire additional workers, and purchase new equipment, they may not be able to increase capacity quickly enough to bid on those contracts. Also, the right flexible financing solution can play an important role in supporting the rapid growth of this company.
Functionality & Cost: Continuously securing access to capital is an effective measure in times of uncertainty and rapid market volatility. But just getting financing doesn’t mean the company needs to use the money. For example, interest is usually paid on credit sales only where the line is drawn. If the funds are not needed and are not withdrawn, the borrower does not pay interest. But if the market changes and funds are needed, then the company has guaranteed, quick access to funds to finance its new growth strategies.
That is why many of our sellers are looking for credit for their customers in the first quarter of 2025. With available access to credit, these US businesses can draw on cash when needed, and move quickly to act on emerging opportunities.
Now is the time to talk to your finances about building financial flexibility into your business so you are ready to take advantage of the opportunities ahead. Schedule a consultation to ensure stability in your portfolio and eliminate debt before the new year begins.
