December 17, 2024
Black businesses are likely to see their growth hindered by Trump’s economic agenda in many ways.
A significant 24% of black-owned businesses operate in industries that depend on tariffs, and the projected tariffs proposed by the Donald Trump administration could cost these businesses between $1.8 billion and $3.6 billion in annual revenue.
That estimate is based on an analysis by William Michael Cunningham, an economist and CEO of Creative Investment Research.And it’s just one possible game-changing example of the challenges black businesses may face as Trump begins his second term as president.
While the impact of the new policies is unclear, a group of black economists agree they could hurt black businesses struggling to compete against larger and financially stronger, less diverse counterparts.
Trump’s proposed policies could raise the cost of consumer goods, increase the national debt and raise the cost of living for people with incomes below $100,000.There is also uncertainty about how his leadership will affect the Federal Reserve’s ability to control interest rates.
TRUMP’S AGENDA MET THE CONCERN OF BLACK ECONOMICS.
BLACK ENTERPRISE interviewed several black economists to get a sense of what the next four years might look like under several proposed policies the Trump administration has proposed reducing the corporate tax rate from 15% to 21%. While some businesses may welcome the cut, other observers fear Trump’s protectionist trade approach and vow to gut the Affordable Care Act, creating costly, systemic problems that could outweigh the tax breaks.
On the trade front, Trump has proposed 10% to 20% tariffs on all imports and 60% to 100% tariffs on goods from China, which he said would create new jobs and help US manufacturers the tariffs will cost consumers $78 billion a year.
Another concern is that Trump’s broader economic plan could increase the federal deficit, which this report estimates could range from $3 trillion to $7 trillion.
PROPOSALS CAN CREATE A ‘MIXED BAG’ FOR BLACK BUSINESSES
Cunningham added that Trump’s policies of protectionism, tax reform and welfare cuts could create confusion for black businesses, with tariffs often raising import prices for large white-owned businesses for those that depend on international supply chains.
“Black firms could suffer if customers reduce discretionary spending due to inflationary pressures from anti-tariffs or supply chain disruptions.”
Romy Tribble Jr., an economics professor at Spelman College, said black businesses in transportation/warehousing, retail, construction, food service, wholesale, manufacturing and agriculture are more dependent on imports and exports.
He says imposing a 25% tariff on goods from Canada and Mexico and a 10% tariff on China would be difficult for black businesses to pass on to customers. may partially or fully absorb tariffs.
“Losing customers or employees is undesirable because both can lead to a significant increase in black business failure or a decrease in the profits required to maintain or expand the business,” said Tribble, who is also secretary of the National Economic Association Network of Black Economists , other professionals and graduate students.
What’s more, there could be environmental and global setbacks for black businesses. Trump’s withdrawal from the Paris climate accord signals a reduction in federal commitments to combat climate change, Cunningham says, unreasonably low-income and minority communities, which are often located in areas most vulnerable to environmental hazards.
“Black-owned businesses associated with sustainable practices or the clean energy industry could lose federal support, hindering the growth of these industries.”
WHAT FUTURE POLICIES MEAN FOR BLACK WOMEN ENTREPRENEURS
Black women-owned businesses, which have been among the fastest-growing companies in recent years, could be adversely affected by Trump’s tariffs.
Rhonda Wonshay Sharp, president of the Women’s Institute for Science, Justice, and Race (WISER), told BLACK ENTERPRISE that about 4% of black women who report being self-employed work in nail salons, more than 6% of in retail trade, 10% in beauty salons, and more than 15% in healthcare this year consumer goods, most of which come from China, Vietnam, Europe and Korea.
He said entrepreneurs in the beauty, health and retail industries, or any industry that relies heavily on imports, should expect the tariffs to increase the cost of supplies will be passed on to consumers, making beauty salon services more expensive.
“If these businesses have low cash reserves or are unable to secure loans to cover increased costs, they are more vulnerable to closure,” Sharp said. “This will have implications for wealth accumulation, economic mobility and fiscal insecurity.”
WISER, which Sharp founded in 2016, is a nonprofit research think tank focused on women of color.She is a former president of the National Economic Association.
Another concern is how Trump’s proposed significant cuts to welfare spending, including potential funding changes to programs like the Supplemental Nutrition Assistance Program (SNAP), the Department of Education and Medicare, could affect low-income households.
Sharpe shared that black women made up 30% of low-income single mothers in 2024. “Any cuts in welfare spending will have unintended consequences for these families and their already under-resourced communities.”
POSSIBLE OPPORTUNITIES OFFERS CAN BRING
Black individuals and entrepreneurs who invest in the stock market may benefit from Trump’s economic agenda. US stocks have reportedly continued to rally since Trump’s election. Much of the rally has been fueled by expectations that Trump’s policies can help various sectors to perform more strongly by benefiting from tax cuts, deregulation and a focus on domestic energy production.Technology, energy and finance stocks have increased in sectors.
Moreover, Cunningham says many black-owned businesses operate primarily on a local to regional scale, including retail, food service and community-based industries. He says less competition from international players due to tariffs could give these businesses a more competitive playing field :
He shared that protectionist policies often spur consumer interest in domestically sourced goods and services, a trend that can benefit small black businesses that meet local needs.
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