What does the recent election mean for your small business and trucking in general?
If investors are any indication, the election means good things. While the overall stock market was up 3% the day after the election, trucking stocks were up 10% - three times more than the overall market. This means the betting people are betting on good things for trucking ahead.
Here are a few reasons, based on history, that the Trump presidency will be great for trucking.
Tariffs
While tariffs are a broad complex issue, the overall sentiment is that in the short term it will drive up shipping as demand for overseas goods is pulled forward before the price goes up when tariffs are implemented. The long-term intent of tariffs is to pull more manufacturing and goods onshore in the US. This would certainly drive more shipping in the US.
Oil
“Drill Baby Drill” has been the Trump administration’s motto. Increased oil supply will mean lower oil costs resulting in reduced diesel prices. During the last Trump administration the DOE national average fuel price was $2.80, and it bottomed out under $2.00. This should mean significant reductions in your single biggest expense, fuel, which has averaged $3.77 during the past 4 years! Increased domestic production also means more freight and supplies need to be moved to grow that production, as well as needing to move all the new oil produced.
Reduced Regulation
During Trump’s last administration, he had a policy that for every new regulation proposed, two old regulations must be eliminated. Less regulation helps increase commerce resulting in more freight. And all indications are that his new administration will be even more aggressive at reducing regulations.
Taxes
The Tax Cuts and Jobs Act (TCJA) from the prior Trump administration greatly reduced taxes in many areas. For small business owners specifically, the Qualified Business Income Deduction (QBID) reduced taxes by thousands of dollars, as did increasing the Standard Deduction. Accelerated depreciation methods also reduced taxes and enticed investment and purchasing of capital goods which increased transportation. Many of the specific deductions enacted under the TCJA are set to expire in 2025. It is likely the Trump administration will extend them or make them permanent.
Independent Contractor vs. Employee Attack
It’s no secret that Democratic administrations would like everyone to be an employee as they are beholden to Labor Unions who can’t organize Independent Contractors. There has been great fear that the Biden administration would enact national regulation under the Pro Act or other means to resemble California’s AB5 anti-contractor law. During Trump’s last presidency he quickly unwound all the damage done to the Owner Operator business model during eight years of the Obama administration. It is easy to anticipate the same from Trump in this administration.
So the bottom line is that after nearly three years of a very difficult trucking market, we expect things to turn around quickly as we enter a new era in 2025!