November 6, 2024 How Donald Trump’s Presidency May Impact the M&D Industry

What can the manufacturing and distribution industry expect from a Trump presidency? Here are the top four potential impacts to plan for.

By Kevin Rhode, Partner at The Bonadio Group

With the 2024 election now concluded and President-elect Donald Trump set to return to the White House, the manufacturing and distribution (M&D) industry can expect some pivotal changes come 2025. Trump brings a distinct set of policy proposals that could dramatically shape the landscape of regulation, taxation, and labor practices. For example, Donald Trump will likely focus on deregulation, maintaining lower taxes, and reintroducing more aggressive trade policies designed to protect American manufacturing.

So, what exactly does this Trump win mean for manufacturers and distributors? To start, it’s helpful to compare how the two candidates’ policies differed during their campaigns and break down what’s now to be expected in the four years to come.

Corporate Tax Rates

• Harris’ Campaign Proposals: Kamala Harris was an advocate for raising corporate taxes, potentially reducing after-tax profits and limiting the funds available for reinvestment. For the distribution sector, which often operates on thin margins, higher taxes could have also meant slow growth and expansion. Harris would also have let most of the major Tax Cuts and Jobs Act (TCJA) provisions expire in 2025.
• What to Expect from Trump’s Presidency: During a second Trump term, manufacturers will likely experience higher after-tax profits, giving businesses more flexibility to invest in new technologies or expand production capacity. Distribution companies will similarly benefit from lower tax burdens, providing greater capacity for expansion and infrastructure improvements. Trump is expected to continue pushing for lower corporate taxes and other pro-business tax reforms as well, including making the tax provisions enacted under the TCJA permanent.

Labor Rights & Worker Protections

• Harris’ Campaign Proposals: As a product of the middle class, Harris is a long-time advocate for workers’ rights. If she was elected, Harris would have likely pushed to increase the federal minimum wage, expand paid family leave and health care protection for workers, and strengthen collective bargaining and union rights. For manufacturers, these policies could have led to higher labor costs, prompting companies to seek productivity improvements through automation or operational efficiencies. Distributors would face similar challenges, with rising payroll expenses potentially cutting into profit margins.
• What to Expect from Trump’s Presidency: The M&D industry can expect business protections from labor laws in 2025 under a Trump presidency. These include loosening existing laws to provide more flexibility for employers and allowing leaders to have more autonomy in managing their workforce. There may also be more opportunities for Americans to enter the M&D workforce given his plans to move more manufacturing back to the States.

Climate Change & Environmental Regulations

• Harris’ Campaign Proposals: Harris has been a vocal advocate for aggressive climate action. If elected, Harris would have likely shifted toward renewable energy and pushed for expanded regulations that directly impact manufacturing. For manufacturers and distributors, this would have meant stricter emissions regulations and potential carbon taxes that could drive up compliance costs for industries that rely on fossil fuels. On the other hand, expanded federal incentives could have benefitted manufacturers involved in renewable energy, electric vehicles, and other clean technologies.
• What to Expect from Trump’s Presidency: Trump has long held the belief that deregulation is the right approach to climate change and has proposed repealing environmental regulations that impact businesses. Also, Trump has introduced plans to streamline the permitting process for new industrial projects. While this won’t help cut emissions, this will likely lower costs for M&D businesses.

Trade Policies

• Harris’ Campaign Proposals: Harris has a history of opposing certain international trade deals, but for the most part, has supported international trade as a necessity to our economy. However, she does believe that international suppliers should conform to the same labor and environmental laws that are standard in the U.S.
• What to Expect from Trump’s Presidency: As many voters are aware, Trump is expected to establish tariffs focused on protecting American jobs and industries. This could mean increasing or creating new tariffs on goods from countries like China to protect U.S. manufacturers from foreign competition and offering incentives for reshoring production to the U.S., encouraging manufacturers to move operations back home. While these protectionist policies could benefit certain manufacturers by reducing foreign competition, they could also raise costs for businesses that rely on imported materials or components, creating challenges in sectors with global supply chains. Distributors, especially those handling international goods, could face higher import costs, leading to potential price increases for consumers.

With the 2024 election now behind us, M&D leaders must prepare for significant implications that will impact the industry as a whole beginning in 2025. Whether it’s corporate tax rates, labor rights, environmental regulations or trade policies, the Trump administration’s priorities will shape how businesses in this sector operate in the coming years. Manufacturers and distributors must stay informed and prepare for potential changes to remain competitive in a rapidly changing landscape.

Kevin Rhode is a partner in the firm’s Assurance Practice. Kevin works closely with large-to-middle-market clients in various industries, including food and beverage, manufacturing, fuel and energy, service providers, and financial institutions. In addition, Kevin works with portfolio companies of private equity groups and entities with multi-national operations. His responsibilities include coordinating and managing financial statement audits and other attest services, including financial statement reviews, compilations, and agreed-upon procedures engagements. He has been a licensed CPA since 2011 and is a member of the American Institute of Certified Public Accountants. To learn more about The Bonadio Group, visit www.bonadio.com.

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