What does the new administration and Congress in Washington, D.C. mean for your company and your future? Many business leaders, especially small businesses owners, are asking this very question. And while it is impossible to predict the specific policy proposals that will ultimately prevail after debate and negotiations, there are some very real possibilities that merit close attention.
Understandably, the Biden administration’s priority for the near-term is focused on tackling the pandemic and helping the economy, especially people and businesses that are still struggling. The President has vowed quick action on a COVID-19 relief package, which includes a myriad of policies and direct financial payments designed to help individuals – a cash infusion that could also help re-charge the economy by encouraging spending – as well as small businesses through grants and lending programs.
Longer term, President Biden’s stated goals on the environment, international trade, domestic infrastructure, and worker protections could result in significant changes for small and larger companies alike. Here is a closer look at just some of the key policy areas that could impact your business:
Many small businesses are still reeling from the effects of the pandemic. In a November 2020 Small Business Index survey by Metlife and the U.S. Chamber of Commerce, 56% of respondents indicated that it would take at least six months to a year for small companies to get back up to speed. Even more worrisome, half of those surveyed believed they could only continue operations for a year or less before having to permanently shut their doors.
For many companies, including nearly 75% of respondents in the Small Business Index survey, proposed financial relief from the federal government could be essential to their future success. Even as negotiations and legislative action continue, the proposed $1.9 billion COVID relief bill contains $50 billion to support small businesses, including $15 billion in direct small business grants. In addition, the overall effects of the package are expected to boost the economy through cash payments and investments. For both small and large retail companies, this could be good news, as consumers may gain confidence and increase spending.
To understand what federal relief options may be available for your business, both now and after a new relief bill is enacted, you can visit the U.S. Small Business Administration’s Coronavirus page for detailed information.
E-Commerce and Global Trade
One bright spot for businesses during the pandemic has been e-commerce. Despite supply chains being pushed to their limits, international trade and global e-commerce have proven to be exceptionally resilient. Beyond innovations and adaption at home, many small U.S. e-commerce companies are finding new audiences across borders, compensating for any lost revenue caused by a shrinking domestic customer base.
How will the U.S. government handle e-commerce and international trade given this role? Most experts agree that radical trade policy changes are unlikely in the near future. According to the Boston Consulting Group, “The U.S. under Biden is unlikely to fully return to the global free-trade agenda that characterized U.S. policy for much of the post-World War II era.” In other words, trade tensions, including disagreements with China and resulting tariffs, will not simply end with new leadership in place. The bigger change is more likely to be a return to diplomacy and the use of alliances in a more collaborative approach with less confrontational rhetoric. Economic tools like tariffs are less attractive to the Biden Administration than more traditional policy tools of free trade agreements. Bilateral investment treaties to build those alliances are essential for tackling geo-strategic threats.
Although new FTAs are not on the “front burner,” President Biden has indicated an interest in re-visiting U.S. engagement in the Trans-Pacific Partnership (TPP), completion of an agreement with the UK, and a possible Trans-Atlantic deal with the EU. These deals might not only help immediate trade relationships but be part of a broader and more unified containment policy with China. This approach could have an impact on U.S e-commerce companies, as more of these organizations look abroad for business. As a recent digitalcommerce360 article discusses, uncertain and changing trade policy with China over the last several years has moved many U.S. companies to search for new manufacturing partners and new sources for products. A more stable trade relationship with China will make planning and sourcing easier. In addition, the article notes that the new administration’s approach to regulating large e-commerce companies could have an impact on the entire marketplace.
Even with the partisan divide in Congress, infrastructure investments is one area where we may see bi-partisan action. President Biden has indicated that rebuilding U.S. infrastructure will be a top priority. If major new federal investments in infrastructure do in fact come to pass, companies in the engineering, construction services and supply sectors, as well as others, could see increased business. And this could even be a vehicle for Federal government investments and incentives for electric vehicles, efficient electricity grids, and broadband communications development.
Beyond inclusion in an infrastructure package, the environmental goods and services sector is clearly a priority for the President and Democratic Congress that could create real opportunities in the years ahead. One of President Biden’s first executive actions was signing an order to re-join the Paris Climate Agreement.
The stronger focus on climate change and conservation will move more companies big and small to examine their own sustainability practices. Small businesses will need to adapt by looking at their internal policies to consider energy consumption and green supply chains, an area that DHL pioneered. Even regarding carbon offsets, small companies can make an impact that not only helps the climate but can serve as a market differentiator. The National Small Business Environmental Assistance Program is a great tool to help businesses learn more about how they can create a sustainability plan and pursue green business practices.
Employee and Workplace Issues
Finally, the new administration has indicated that it will focus on a number of workplace issues, including employee safety, compensation, family leave, protections for workers and labor unions, and increasing the minimum wage. Sorting out these issues and understanding their eventual impact on your business will be critical in the months and years ahead. Even as the Administration pursues efforts to help small business and promote their essential role in the economy, some of the workforce agenda items are leaving business owners concerned. As is always the case, the best answer to an uncertain landscape is to identify partners that can help you plan and adapt.
How do you expect a change of leadership in Washington, D.C. to impact your business? Let us know on Twitter @DHLUS.