OPINION:
Another divided government.
We have been to this rodeo before, most recently under Presidents Bush, Obama, Biden and Trump. There will be a stalemate for the next two years, with any major piece of legislation — healthcare, immigration, etc. — requiring a two-thirds majority in both the House and Senate to override a presidential veto.
It is also very likely that the Democrats will once again get caught up in investigating the president and all those connected to him.
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Here is what businesses can expect.
Tariffs
Tariffs have complicated pricing, costs and business relationships for many of my clients. President Trump will not back away from them, and he will take litigation to the Supreme Court, as he has done before. This time, however, things are a little bit different.
Not only are Democrats broadly opposed to his tariff policies but a fair number of Republicans are too. Mr. Trump has already said he will be “Mr. Veto.” Can the Democrats convince a substantial bloc of Republicans to stand up against tariffs? It will not be easy, but this has the highest likelihood of producing a veto override.
Inflation
The Iran war is contributing to higher gas and petroleum prices, raising the costs of commutes and many products and raw materials purchased by businesses across industries. Congress can stop additional war funding, and if it does, the president’s options will be limited. It is reasonable to expect a slowdown and more stability in the energy markets because of this.
However, businesses can expect continued exposure to volatility in fuel, freight and raw materials.
What about other factors contributing to inflation? Inflation remains elevated for many reasons, not least of which is the excess of money chasing too few goods and services, an enormous federal deficit and a central bank that is forced to “print” more money rather than getting help through spending reductions and tax increases. The latter two will not happen in the next two years or even beyond.
This means that businesses can expect inflation to remain elevated for the next two years, probably in the 3% to 4% range.
Interest rates
With inflation elevated and the economy relatively strong, the Federal Reserve is unlikely to reduce interest rates anytime soon. Today’s prime rate is 7%. According to long-term tracking of daily historical figures, the overall cumulative average of the U.S. prime rate — excluding a few major short-term fluctuations — is 6.85%, and the long-term median is 6.25%.
So things are really not that far from the norm. Neither Congress nor the White House will affect this rate over the next two years, which means that, as a businessperson, you can expect interest rates to remain where they are. Evaluate borrowing and investment decisions using today’s financing costs rather than assuming substantial rate cuts.
Taxes
The One Big Beautiful Bill Act of 2025 made many big tax benefits — such as depreciation and estate taxes — permanent. What is “permanent,” exactly? Taxes will return to the forefront of the political arena as the country grapples with deficits, high government debt and funding for social and retirement programs.
They will certainly be an issue in the 2028 elections, and the changes could be widespread depending on the results then, but not now. As a businessperson, you can expect little to change in one of your most significant expenses over the next two years.
Immigration
Legislation enacted in June provided immigration enforcement funding available through fiscal year 2029. A Democratic majority cannot simply erase that money by withholding annual appropriations. However, that funding will come under significant scrutiny, which could give businesses time to help employees or contractors with uncertain status remain in the country and in their employment.
Small-business legislation
The 119th Congress has passed several bills that have helped businesses, including bills that provide a regulatory framework for cryptocurrencies, value privately owned companies, reauthorize innovation grants and expand tax deadlines for enterprises in disaster areas.
Other bills approved by the House Committee on Small Business would provide more funding and better resources for small businesses, and they are likely to pass this Congress. I would not worry about the future of such legislation; supporting small businesses is one thing on which both sides agree.
Local
The Republicans’ poor showing at the national level in the midterms Tuesday has also trickled down locally. That means, potentially, more local regulations on the workplace, hiring, overtime, minimum wage and health and safety. Businesses will need to pay attention to all these over the next two years.
My advice here is to get an update from your local lawyer, accountant or payroll service regarding the potential changes.
The next two years in Washington will be all about 2028. Both parties will be positioning themselves for that election. If you run a business, you should be doing the same.
• Gene Marks, CPA, runs The Marks Group PC, a financial and technology consulting firm near Philadelphia.
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