As President Trump enters the first 100 days of his new term, small business owners are watching closely to see how early policy decisions will impact their operations, costs, and overall tax strategy. While campaign promises generate headlines, it’s the execution—and timing—of those proposals that will affect real-world businesses. Below, we break down two key areas of focus: trade and taxation, and what they could mean for small business owners.
Trade Policy and Tariffs
One of the administration’s first major actions has been an aggressive stance on trade with China, including the introduction of a 145% tariff on Chinese goods. While the stated goal is to support American manufacturing and reduce reliance on foreign supply chains, the immediate impact for many small businesses is an increase in product and material costs.
Small businesses that rely on imported goods—especially from China—will need to begin evaluating supply chain alternatives and developing strategies to mitigate rising costs. This may include:
- Sourcing from domestic suppliers
- Renegotiating supplier contracts
- Reviewing inventory management and cost structures
- Adjusting pricing strategies to protect margins
Some businesses have already begun communicating their approach to customers. For example, several brands have indicated they will absorb tariff-related costs without raising prices—though this may not be feasible for every company. A proactive strategy is essential to manage these shifts effectively.
Tax Policy Outlook
Another area of significant interest is tax policy. The administration has set July 4, 2025, as the target deadline for passing new tax legislation. If enacted, these policies could offer meaningful benefits to small business owners. Key proposals include:
- Extension of the Tax Cuts and Jobs Act (TCJA) provisions, including:
- A continued Qualified Business Income (QBI) deduction
- The return of 100% bonus depreciation for eligible assets
- A continued Qualified Business Income (QBI) deduction
- Repeal or adjustment of the $10,000 SALT deduction cap
- Elimination of taxes on tips, overtime, and Social Security income
While these proposals are still under consideration and may evolve, they signal a potential tax environment that is more favorable to entrepreneurs, especially pass-through entities such as S corporations. Small business owners should begin evaluating how these changes—if passed—could influence long-term planning, investment decisions, and reasonable compensation strategies.
What This Means for Small Business Owners
Small businesses remain the foundation of the U.S. economy. Policy changes in trade and taxation can significantly affect cash flow, pricing, and compliance requirements. As these updates develop, business owners should:
- Monitor changes closely and seek professional guidance
- Reassess tax strategies, including how officer compensation aligns with IRS guidelines
- Evaluate cost structures and pricing to maintain profitability
At ReasonableCompCalc.com, we provide tools and advisory support to help S corporation owners determine defensible, IRS-compliant compensation strategies. Staying informed and adaptable will be key to navigating this evolving landscape.
Need support adjusting your compensation or tax strategy in light of these changes?
Contact our team to schedule a consultation or learn more about our reasonable compensation calculation services.
