Donald Trump is returning to the presidency in 2025, and with it will come a host of changing economic policies and directions.
NJBIA takes a look at how these different approaches could impact New Jersey businesses in the coming years.
CORPORATE TAXES
Trump ran on a promise of cutting the federal corporate tax rate to 15% from its current 21%, which would rank as the sixth biggest tax cut since 1940, according to the Tax Foundation.
And because both chambers will likely be controlled by Republicans, the required Congressional approval for the tax cut is likely simpler than recent DC gridlock.
A federal corporate tax rate cut would be most welcomed by New Jersey businesses which continue to pay an outlier 11.5% state rate, the highest in the nation by far.
But then, New Jersey Democrats saw the last corporate tax cut under Trump as an opportunity to “temporarily” raise the New Jersey CBT rate – even though it doesn’t seem so temporary anymore.
“And that still remains a concern going forward,” said NJBIA Chief Government Affairs Officer Christopher Emigholz. “The thinking was, ‘Well, let’s tax our businesses more because they can afford it thanks to a federal tax cut.’
“But that’s a very narrow lens to look through when you see how we compare competitively to other states, not just with corporate taxes, but all business taxes. We do not compare well to other states that all would be seeing the same federal rate cut benefits and thus would still have the same competitive disadvantage.”
Earlier this year, in fighting Gov. Phil Murphy’s corporate tax increase to 11.5%, NJBIA detailed in a video recent examples of businesses that have either left, cut jobs or decided to grow elsewhere due to New Jersey’s competitive levels.
“We’ve seen even more jobs cuts or examples of New Jersey-based businesses growing elsewhere since the governor approved the CBT increase,” said NJBIA President and CEO Michele Siekerka.
“So, while a lower CBT rate on a national level would be good news for New Jersey business, it’s important that our policymakers don’t raise the state rate again with the misguided mindset of, ‘Well, they can afford it.’
“We have one of the highest unemployment rates in the nation, although not high relative to history. But as we’ve often said and as has been proven, a large employer will move or grow where they can be the most profitable or have the best chance of being successful.”
TARIFFS/MANUFACTURING
There is generally a wide chasm about the perception of tariffs on the economy.
President-elect Trump campaigned on raising tariffs by up to 20% and up to 60% on Chinese-made goods, to make more U.S. manufacturing healthier and more competitive.
Many economists, however, contend that tariffs will instead increase inflation for U.S. consumers and businesses.
“Typically, tariffs are paid by companies that import the goods, not by the countries who are being assessed the tariff,” Emigholz said. “So, there could be situations where a U.S. or a New Jersey manufacturer is buying products from overseas that could be a part of a product they’re making, which would increase the price of the product when it’s sold.”
There is historical precedence, however, of tariffs protecting manufacturers in their home country and helping prevent foreign countries from unfair trade practices.
And it’s also difficult to paint the impact – positive or negative – on all manufacturers with a broad brush. Smaller manufacturers, conceivably, could be extra challenged by transition costs. Larger manufacturers, also conceivably, might find tariffs an opportunity to rebuild their supply networks.
The New Jersey Manufacturing Extension Program, for its part, feels “widespread tariffs are not conducive to increasing manufacturing in New Jersey,” according to its CEO Peter Connolly.
National Association of Manufacturing CEO Jay Timmons told CNBC this week that the success or failure of increased tariffs under Trump would depend on “how they’re implemented.”
“If they’re targeted on specific items that are relative to certain issues like the first phase of the China trade deal that was negotiated in 2020, if it’s targeted toward international property theft or other issues like dumping or subsidization, then that can be very meaningful to manufacturers in a positive way.” Timmons said.
“If they’re broad-based, they could increase the cost of doing business here in the United States, which, of course, would lead to more inflation and not be good for consumers.”
In either case, tariff increases are very likely coming as Trump does not need a green light from Congress to make them happen.
ENERGY POLICY
Less than six months into his first presidency, Trump withdrew the U.S. from the Paris climate accord.
So rollbacks of clean energy policies are anticipated, particularly as he has touted maximizing oil and gas production during his campaign. The sharp dip in clean energy stocks after he was declared winner of the election this week would also be a concerning telltale for the industry.
But a stopping or slowing of the clean energy transition, of which New Jersey is fully ensconced, might not be so simple, as NJBIA maintains its all-of-the-above energy policy.
“The Inflation Reduction Act signed into law by President Biden guarantees billions of dollars of solar and wind subsidies for another decade,” said NJBIA Deputy Chief Government Affairs Officer Ray Cantor. “That money is already flowing.
“And while the Inflation Reduction Act can be tweaked, it cannot be repealed.”
Part of those tweaks, however, would almost certainly be the end of federal tax credits for those who buy electric vehicles. In New Jersey, that state benefit went away this year, making EVs less affordable for those who are interested.
At the same time, New Jersey is maintaining a mandate to have no new gas cars purchased in the state by 2035.
Cantor said he is hopeful that under a Trump presidency there might be some more acceptance of alternative fuels, which the Murphy administration has been slow to embrace in favor of all-electrification policies.
“Interestingly, those in the oil and gas industry also benefit from tax credits that come from things like carbon capture, advanced biofuels and hydrogen,” Cantor said.
“The one thing we would hope President-elect Trump can get behind is the need to upgrade our grid. No matter what energy source we’re using, no matter the speed of the energy transition, we’re going to need more electric power.”
While campaigning in Wildwood last May, Trump skewered New Jersey’s burgeoning offshore wind industry as “horrible” and “the most expensive energy there is.”
But whether he can stop the progress of current projects off the Jersey Shore remains to be seen.
Conceivably, the incoming administration could redirect the priorities of the Bureau of Ocean Energy Management away from offshore wind permitting and toward oil and gas leases.
Another method could be to not defend lawsuits from offshore wind opponents who are challenging federal permits.
“It’s still our hope and our position that wind projects can have a place as part of our overall energy future and planning,” Cantor said. “We look forward to working with and providing input to the Trump administration as we continue to advocate for a diverse energy portfolio that is practical, affordable and feasible.”
LABOR LAWS
While Trump did make repeated appeals to organized labor on the campaign trail, it’s a safe bet that he won’t be seeking the ambitious labor agenda sought by the Biden administration – which included the ban on most non-compete agreements.
But just like the corporate tax situation, Trump’s more pro-business policies could lead to more pro-labor policy efforts in New Jersey in Gov. Phil Murphy’s last year and under current legislative leadership.
For example, NJBIA and other business groups have been successful in holding off a so-called “heat” bill that would hamper the ability of New Jersey businesses to operate in hot weather.
Over the summer, the U.S. Occupational Health and Safety Administration (OSHA) proposed a federal rule to address heat in the workplace, making a New Jersey state law less necessary or likely.
But now that federal rule is in jeopardy with Trump returning to the White House.
“In the absence of federal rules regarding heat in the workplace under the Trump administration, we would anticipate another push by supporters of the New Jersey bill,” Emigholz said.
“That’s not to say we haven’t had constructive conversations with the sponsors of the New Jersey ‘heat bill,’ because we have and we’re grateful for having those ongoing conversations. But this is just one potential example of where a federal regulation goes by the wayside and there could be a legislative effort on the state level to fill a perceived void.”
