Policy under President Trump

What tech leaders need to watch

Clock icon 3 Minute Read
Feb 9, 2017, 4:25 PM

Every four (or eight) years, the US and the economy face a change of administration. This season, the pendulum promises to swing quite a bit (if campaign rhetoric is to be believed). Barely three weeks into the term, it’s difficult to say how President Trump and the new administration will approach policy and governance in the long term. Nevertheless, early orders (and talk of future policy) suggest the impact on the tech industry—and subsequently, your real estate strategy—may be significant.

Tech’s ties to the new administration

Trump met with more than a dozen tech execs between his election and inauguration, promising to push for the industry’s continued success. Several industry leaders, including Elon Musk and Gini Rometty, are now economic advisors on the president’s recently established Strategic and Policy Forum (Travis Kalanick had initially signed on, but since left.) They join a number of successful businesspeople from various industries including Jack Welch, Bob Iger, Mark Weinberger and the forum’s chairman, Stephen Schwarzman.

The group will be called upon to “share their specific experience and knowledge” as they relate to the administration’s plans and policies.

What are the administration’s plans and policies that impact tech? Here’s what we know so far:

Cybersecurity

He’s quiet on specifics, but President Trump has called cybersecurity a priority and tapped Rudy Giuliani to champion efforts. He drafted an executive order to improve the federal government’s cybersecurity defense, but postponed signing it after meeting with cybersecurity experts and top White House officials in late January.

Current speculation is that without a dedicated task force and oversight, U.S. organizations may fall behind in keeping corporate, employee and customer data safe. This could create a potential opportunity for cybersecurity companies and experts in that they can educate their clients on these important issues, and champion the effort at the industry/everyman level.

Pending how this plays out, data storage regulations—and thus your firm’s storage needs—may change, and drastically. Do you have onsite data storage? Outsource to a provider? A combination? Changes in policy may force tech and cybersecurity firms in particular to manage and house their data differently. Be prepared for this to impact your data storage strategy in the future.

Immigration / globalization

On Feb. 5, more than 100 tech companies filed an amicus brief in response to the president’s executive order on immigration. Here’s some background on why immigration restrictions may be particularly tough on tech:

A March 2016 independent report by the National Foundation for American Policy evaluated 87 US-based unicorns—startups valued at or over $1 billion that aren’t yet public. They found:

  • 51% of the country’s unicorns had at least one immigrant founder. Almost half of these came to the U.S. as a student.
  • 71% had at least one immigrant that was key to growth and innovation (CTO, CEO, VP engineering, etc.).
  • Billion-dollar startups with immigrant founders are leading job creators.

So, there’s concern that immigration restrictions—including those on H-1B visas—would slow the growth of cutting-edge companies in the United States. Not to mention the limitations this would put on the entire tech workforce, which has come to rely on the program to source highly skilled labor in the face of a US shortage.

This would impact some cities and employers more than others, based on historical distribution of H-1B visas. Additionally, the majority of students currently in the US from the seven previously banned (as of Feb. 9) countries are graduate students, with the majority of those in STEM fields. There are also indications that a limit on H-1Bs would spark an increase in domestic wages.

Keep an eye on developments here especially if you’re thinking about where to establish, relocate or expand your business. A limit on H-1B visas, lack of graduate talent at nearby schools and/or higher wage expectations may drastically change your location strategy.

Taxes and trade

President Trump campaigned on the promise of tax cuts, including the lowering of corporate tax rates to 15-20%. There are still questions about exactly what can be implemented, and who will pay for it.

This is arguably where the biggest boost could come for tech companies under the new administration—provided they invest in the US. Additionally, global firms may benefit from Trump’s proposed repatriation of overseas profits.

Potential challenges come with the restructuring or termination of trade deals that would lead to higher tariffs. These changes could drive up consumer prices significantly for products produced overseas, or push tech companies that currently rely on overseas manufacturing to bring operations on-shore.

If your company manufactures products, changes here could have major implications on your real estate portfolio. It may make more economic sense, for example, to lease or buy an industrial facility in Dallas or Detroit, rather than Tianjin or Tijuana.

Regulation

Trump wants to loosen the regulatory environment across the board, from finance to the EPA. It’s anticipated that any major moves here will take some time.

In the tech space, watch net neutrality. Trump doesn’t support current FCC regulations. Ajit Pai, the new FCC chairman, is a vocal opponent of net neutrality and has already made moves to roll back some consumer protection regulations put in place under the Obama administration.

To many, removing neutrality would be a setback bucking the intent of the internet. But, looser regulations would benefit broadband and wireless carriers. The uncertainty here—and potential volatility—may be cause to put more emphasis on your real estate flexibility.

Another area where less regulation may come into play for tech is in M&As. Mergers and acquisitions have been on the rise within the tech industry in the past few years, and fewer restrictions could open up new possibilities. There are also indications that President Trump may be more open to mega-mergers than Obama. Should M&A be part of your growth or exit plan, there are steps you can take now to plan for the impacts it will have on your existing office(s).

Author: Laurel Miltner