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Results from yesterday’s election are in, and businesses and traders are already bracing for the changes that President-Elect Donald Trump will implement once he is inaugurated.
During his campaign, which ran for nearly a year and a half, he promised radical changes to health insurance, taxation and immigration. Whether the new Republican Congress will enact his plans is yet to be seen.
Americans also weighed in on more than 150 ballot measures in various states when they cast their votes yesterday. Here are some of the shifts that the election will entail for businesses.
1. Market reactions
U.S. stock markets opened more calmly than projected, which could be attributed to the gracious tone of Trump’s acceptance speech early this morning.
The Dow Jones Industrial Average dropped more than 700 points in futures trading overnight, while S&P 500 index futures fell as much as 5 percent, according to Quartz.
However, within the first hour of opening, some markets were up over yesterday’s close. They’ve fluctuated slightly since, with the Dow Jones Industrial Average up 210 points (1.15 percent) as of 1:55 p.m. ET, the S&P 500 up 21 (.98 percent) and the Nasdaq up 37 (.76 percent). The dollar exchange rate is also stable this morning. Trump’s claims that he is going to rebuild U.S. infrastructure are correlated with a surge for Caterpillar, which is currently up 6.1 points (7.21 percent) over yesterday’s close.
“By way of comparison, major indexes fell about 2 percent four years ago after President Obama was re-elected,” according to CNN Money.
Anticipation of a December Federal Reserve interest-rate hike has dampened investment activity throughout the latter half of 2016. Expectations of the hike “had fallen to about 50 percent as results pointed to a Trump triumph,” but they’ve since “returned to almost 80 percent,” according to Bloomberg.
Much hinges on Trump’s rhetoric in the coming hours and days.
2. Threats of an Obamacare repeal
While there’s a great deal of uncertainty, some industries have reacted in accordance with Trump’s campaign promises. The stock of healthcare firms is falling today due to Trump’s stated intention to repeal the Affordable Care Act. Centene Corporation is down 10.91 points (16.33 percent), making it the second-worst-performing stock on the S&P 500 today (as of 2 p.m. ET).
Under Obamacare, many small-business owners have complained of having to put in hours of administrative work to insure their employees — and foot the bill amid rising premiums. However, the repeal of the ACA could reverse progress toward insuring the largest proportion of Americans in history.
3. Minimum wage hikes
Minimum wage increase proposals passed in four states: Arizona, Colorado, Maine and Washington.
- In Arizona, the minimum wage will rise from $8.05 to $12 by 2020. Minimum-wage workers at large companies will get 40 hours of sick days a year, while those at smaller businesses will get 24 hours a year. Employees will be guaranteed one hour of paid sick time for every 30 hours worked.
- In Colorado, the minimum wage will increase from $8.31 to $12 by 2020.
- In Maine, the minimum wage will rise from $7.50 to $12 by 2020. For tipped workers, it will increase to $5 an hour, with $1 increases until earnings are equal to the general minimum wage by 2024, according to Money.
- Washington state voters approved a ballot measure to raise the minimum wage from $9.47 to $13.50 an hour by 2020. Employers will now be required to provide minimum-wage employees with one hour of paid sick leave for every 40 hours worked.
In South Dakota, voters rejected an initiative to lower the minimum wage for non-tipped employees under 18.
Trump has expressed opposition to a minimum wage hike at the federal level.
4. Recreational and medical marijuana legalization
- Voters in California, Nevada and Massachusetts approved ballot measures legalizing the recreational use of marijuana.
- Voters in Arizona rejected recreational marijuana.
- As of 12:24 p.m., recreational pot in Maine is still too close to call with 94 percent of precincts reporting.
- Florida, Arkansas and North Dakota voted to approve marijuana for medical purposes.
- In Montana, residents voted to give patients easier access to medical marijuana. Licensed providers will be allowed to serve more than three patients and hire employees to cultivate, dispense and transport medical marijuana, according to Newsweek.
5. Tax reform
Trump has proposed lowering taxes for the wealthiest Americans, who earn more than $413,350 per year, to a 33 percent rate. He wants to reduce the number of tax brackets from seven to three, and 47 percent of his proposed tax cuts would go to the top 1 percent of richest Americans, according to Forbes.
As for his proposed business tax cuts, Trump has put forth a plan to reduce corporate tax rates from 35 to 15 percent. This would be a means of deterring companies from operating in other countries with lower tax rates — and keeping them in America.
This 15 percent rate would apply to income from an S corporation, partnership or sole-proprietorship.
“This means that a taxpayer earning business income would experience a drop in top tax rate from 39.6 percent to 15 percent under the Trump presidency,” according to Forbes.” It also means that under the Trump plan, the difference in top tax rate between paid as an employee (33 percent) and as an independent contractor (15 percent).”
Trump has also put forth a plan that would ease the burden on large companies such as Alphabet, Apple, Microsoft, Oracle and Cisco Systems bringing cash into the U.S. from overseas, with money saved to go to infrastructure upgrades.
“It will provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent,” according to DonaldJTrump.com.
6. Paid leave and childcare policies
According to the NFIB, Donald Trump proposes expanding unemployment insurance programs and eliminating fraud within them to pay for six weeks of maternity leave.
According to Trump’s website, his child care plan would incentive employers to provide on-site care by raising the annual tax credit and also allow both working and non-working moms to deduct childcare expenses. Some have said that this plan encourages mothers to stay at home.
7. Limited immigration
Most Americans are familiar with Trump’s xenophobic comments, including his plan to build a wall between the U.S. and Mexico, his call for the “extreme vetting” of refugees and talk of mass deportations, ideological certifications and the end of birthrate citizenship. He has also proposed a “complete and total shutdown” of Muslim immigration to the U.S. and defunding of “sanctuary cities” where undocumented aliens reside.
If Trump deports all undocumented immigrants, this action could reduce the labor force by 6.4 percent, reduce the GDP by 5.7 percent per year and cost nearly $1.6 trillion to enforce over 20 years, according to one estimate.
Trump also wants to eliminate the H-1B visa program, which allows non-immigrant workers to reside in the U.S. to perform skilled labor. Many companies in Silicon Valley take advantage of this program in order to recruit the best talent from around the globe.