Industry Pulse: President-elect Trump

December 12, 2016 -  By

A look at how the new administration could affect the landscape industry.

Despite the predictions of pollsters and pundits to the contrary, Donald Trump upset Hillary Clinton in the presidential election.

Not only did Trump win the presidency, but the Republicans held majorities in both the U.S. House of Representatives and Senate. This gives Trump the possibility of having his legislative agenda passed through Congress by friendly majorities. The only hang-up is the majority in the Senate is less than the 60 Republicans (it was 51 as of this writing) needed to make the Senate filibuster-proof, so some negotiation and compromise with Senate Democrats may be necessary.

What impact will the Trump presidency have on landscape contractors? Let’s look at several areas where Trump’s policy pronouncements during the campaign, if implemented, might affect your business. A word of caution: Trump’s comments during the campaign should be taken with a grain of salt. He has shown himself to be a showman and negotiator. Look at the campaign as more of a carefully scripted reality show, where conflicts are set up among participants for entertainment and impact value.

Trump appears to be a flexible pragmatist rather than a stubborn ideologue. That’s what drove many of his primary opponents crazy. He’d float an idea, then modify it over the course of a few days as he got feedback from the press and the public. So, all this may change once he gets into office and the pragmatist in Trump takes over.

Economy

Trump has promised to produce economic growth of 3.5 percent per year. Over the past year, the U.S. economy has grown an average of 1.5 percent, according to the U.S. Bureau of Economic Analysis. Although many economists are skeptical that Trump can produce this level of growth, he has stated that he can do even better than the 3.5 percent in his economic plan.

How does he plan to stimulate this level of growth? His economic plan consists of three major components: tax cuts, a rollback of government regulations and renegotiating trade deals that he believes now harm the U.S. economy.

Trump has proposed restructuring the tax code, reducing the corporate rate and implementing new, lower across-the-board personal income tax rates. An analysis by the Tax Foundation found middle-class earners (those making roughly $50,000 a year) would keep, on average, an extra $1,000 a year. Those who make $450,000 and up would get more than $100,000 on average.

These cuts would add about 0.17 percentage points to the current rate of economic growth. The Tax Foundation estimates the cuts would add $10.14 trillion to the federal deficit over the next decade, after accounting for economic growth. He has a good chance of getting his tax ideas through Congress. His original tax proposal has been modified greatly to align more with House Speaker Paul Ryan’s.

Trump promises to eliminate “every wasteful and unnecessary regulation.” He specifically cites the Environmental Protection Agency’s (EPA) Waters of the U.S. (WOTUS) regulation, although that regulation has been held up by a federal court injunction. It’s likely he will have EPA and the U.S. Army Corps of Engineers withdraw the regulation.

It’s difficult to say which other regulations may fall. He’s promised to ask his new agency heads to conduct a thorough review of all federal regulations for possible elimination. Likely targets are regulations that were implemented during the last two years of the Obama administration, such as a new pesticide rule, which is scheduled to be finalized soon.

Renegotiating U.S. trade agreements was a cornerstone of Trump’s campaign. Over the past several decades, foreign trade has become a large part of the U.S. economy. Trump made many statements during the campaign that have led some to believe that he could start trade wars with some of our major trading partners, which could lead to an overall decrease in economic growth.

We’ll have to trust that Trump will talk tough and not take actions that would precipitate a trade war.

Immigration and guest-worker programs

Immigration was the issue upon which Trump launched his campaign. His policy proposal is to build a wall along the U.S./Mexico border, make Mexico pay for it and round up the undocumented living in the U.S. and deport them.

Trump has already softened his stance on immigration. In his 100-day plan, Trump said he would submit legislation to Congress that would fully fund the construction of the wall, seeking an appropriation from Congress to build a wall. Trump estimates the wall will cost about $8 billion-$12 billion. He plans to force Mexico to pay for the wall by blocking remittances from undocumented Mexicans living in the U.S. to their families in Mexico. However, if he deports all undocumented Mexicans living in the U.S., no one will be left to pay for the wall.

My sense is that Congress will balk at the wall price tag. What may happen is that part of a wall will be built that integrates with the existing border fence that was started during Bill Clinton’s administration and extended by George W. Bush. Photos will be taken and victory declared.

Deporting undocumented workers could cause the most problems for landscape contractors. In his Aug. 31 immigration policy speech, Trump reiterated that he would create a task force to deport illegal immigrants. He promised to triple the number of Immigration and Customs Enforcement deportation officers, strictly enforce all U.S. immigration laws and deport anyone who is here illegally.

In 2015, Pew Research Center studied undocumented workers employed in the U.S. and found 24 percent of all workers in the landscape industry were undocumented in 2012. The industry has one of the highest concentrations of undocumented workers of all the industries Pew studied.

Surveys of landscape company owners consistently identify finding workers among the top three problems they face in running their companies. Imagine the impact if 24 percent of our industry’s workforce vanished. Competition for the remaining workers would intensify enormously, making any current labor shortages even worse.

As well, our industry will be competing with other heavy users of undocumented workers, such as construction, apparel manufacturing and agricultural crop production.

So even if you don’t or don’t think you employ undocumented workers, any disruption in the undocumented immigrant labor force will have a significant impact on your landscape contracting business.

I believe Trump will find some “bad actors”—criminals who are living in the U.S. illegally—and make a show of deporting them and then, quietly, not go any further.

At first blush, Trump would seem opposed to guest-worker programs. After a March primary debate, Trump issued a statement that if elected, “I will end forever the use of the H-1B as a cheap labor program.” The H-1B program, used extensively by the technology industry, allows foreign workers with specialized skills to enter the country legally and work in specific areas where workers are scarce.

But Trump himself makes extensive use of the H-2B seasonal worker program in his hotels and golf courses—the same program used by landscape contractors.

Will a President Trump be more favorable and understanding toward companies using H-2B than the tech companies using the H-1B program? It’s difficult to say at this point, but we could hope that he would understand the business need for seasonal workers.

Obamacare

Trump has pledged to “repeal and replace” Obamacare—the Affordable Care Act (ACA)—in his first 100 days. The ACA now provides health insurance for about 20 million Americans. Trump, however, has never specified what he will replace it with. The repeal will be easy, but the replacement will be very difficult.

I find it hard to believe that Trump will take health insurance away from 20 million Americans without having some way of providing them an alternative. The political fallout would be tremendous.

Although the House of Representatives passed a bill to repeal Obamacare over 60 times, it did so with the assurance that the bill would either die from filibuster in the Senate or be vetoed by President Obama. Now it has the real possibility of passing.

Practically, I think legislation will be crafted that “repeals” Obamacare, while replacing it with another program with many of the same provisions as Obamacare but under a different name. The program will be streamlined with some of the most objectionable provisions removed, such as the coverage mandates.

Let’s hope that President Trump is a pragmatist.

About the Author:

Gregg Robertson, Landscape Management's government relations blogger, is a government relations consultant for the Pennsylvania Landscape & Nursery Association (PLNA) and president of Conewago Ventures. From 2002 until May 2013 he served as president of PLNA. Reach him at gregg.robertson@conewagoventures.com.

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