How will Trump's policies affect foreign entrepreneurs in the USA?

Immigration forecast for foreign entrepreneurs: Navigating new realities

Although specific policies have yet to be announced, foreign entrepreneurs are preparing for a transformed operational environment. European enterprises, in particular, anticipate tighter regulations. The year 2019 is remembered as a challenging period for foreign business founders, with diplomatic strains leading to significant policy shifts by the Trump administration. Notably, the duration of the entrepreneur visa (E-1 for entrepreneurs, E-2 for investors) was reduced from five years to just 15 months. Subsequent adjustments extended it first to 25 months and later to 48 months.

Obtaining an E-2 visa can take anywhere from two weeks to five months, largely due to the varying caseloads at consulates. For instance, in March 2024, a surge of French applicants for the E-2 visa experienced extended processing times—from several weeks to over a year, exacerbated by administrative delays during the Olympic Games. Factors such as the strength of the application and the applicant's experience also play crucial roles in processing times.

With Trump's reinstatement, experts urge foreign entrepreneurs to tackle visa-related issues promptly. To minimize the risk of denial, it's essential to meet the E-2 visa's primary requirement of job creation. While seasoned entrepreneurs may have an advantage, newcomers, especially those in innovative sectors, can compensate with strong business proposals that promise to bolster U.S. employment.

Should legal immigrants be concerned?

Opinions among expatriates from the Expat.com community are mixed regarding the impact of Trump's policies. Some, like Pescaraplace, argue that the changes will primarily affect those not compliant with U.S. immigration laws. "I really don't think the Trump administration will change anything for the readers of this website, as we are mostly legal immigrants. However, those not adhering to the immigration regulations should brace for significant challenges." On the other hand, Parenga anticipates stricter regulations affecting all: "Trump's policies could impose tougher conditions not only on illegal immigrants but likely on legal ones too. We might see protracted delays in securing an Employment Authorization Document (EAD), increased difficulty in extending visas, more frequent requests for evidence (RFE), and more stringent checks."

During his campaign, Trump encouraged foreign talents to work in the U.S., even promising Green Cards to graduates from American universities. Nonetheless, Parenga suggests that the reality could resemble the restrictive measures from Trump's first term: "We should prepare for a considerable slowdown in immigration processes, which could create numerous complications," Parenga notes. "Such delays and the complexities of these processes are likely to increase costs, potentially discouraging and exhausting many applicants." Parenga cites friends who obtained American citizenship just two months after applying, in contrast to what might be expected now: "With Trump back in power, the processing times could extend to at least a year or more, involving more procedural hurdles. This could particularly impact entrepreneurs, making their journey especially challenging."

The implications of 'America First' for business in the United States

Trump's re-election campaign was heavily anchored on the 'America First' slogan, which not only served as a political rallying cry but also underscored his protectionist agenda. The President has proposed steep increases in tariffs on imported goods, raising rates from 10% to 20% across the board. More specific hikes are planned for key trading partners: 25% for goods from Mexico and Canada and a dramatic 35 to 60% for imports from China—despite its status as a major competitor and trading partner, akin to Mexico and Canada. In a notable move, tariffs on electric cars produced by Chinese companies in Mexico could skyrocket to 200%.

Pescaraplace criticizes these measures, suggesting they contradict the very essence of 'America First' by potentially destabilizing essential international relationships. "If Trump enacts these tax increases on imports, we're on a direct path to a severe recession. Targeting major economic partners like Canada and Mexico not only seems reckless but could also prove extremely costly for the United States. The repercussions could include retaliatory measures from these nations," he warns. Following Trump's announcement, Beijing called for enhanced trade cooperation over conflict, while Canada and Mexico pointed to existing free trade agreements with the U.S. that could be jeopardized. The European Union has also expressed concerns about the new wave of protectionism potentially straining transatlantic relations.

Inflation concerns in the wake of Trump's policies

The apprehension regarding inflation isn't limited to foreign entities; American companies are also on high alert. As of October 2024, the Federal Reserve reported a slight uptick in inflation, a trend that might accelerate due to Trump's new economic policies. Nelson Domingues, an expatriate, anticipates severe repercussions, including a potential "wave of bankruptcy among farmers," triggered by Trump's plans to massively deport illegal workers from the agricultural sector. This workforce reduction could significantly disrupt production and lead to increased consumer prices. Pescaraplace also predicts inflationary pressures, noting that "the removal of low-cost agricultural labor will inevitably cause a sharp increase in the prices of fruits and vegetables at supermarkets."

Economists warn that both the United States and China could emerge as the primary losers in an escalating trade war, given their substantial interdependence as trading partners. They foresee a reduction in U.S. customs revenues—despite higher tariff rates—and a decline in American wages, potentially affecting skilled workers by up to 1.6%. The European Union, too, might face economic losses, though neighboring countries of the U.S. could experience different outcomes.

Parenga outlines a challenging new landscape for foreign entrepreneurs, anticipating that "resource availability could become a significant challenge in the upcoming years, with costs escalating rapidly due to constant regulatory changes." While he acknowledges the potential for short-term gains under Trump's administration, Parenga contrasts this with the economic strides made under Biden, particularly in green energy. He stresses the importance of pursuing gas and oil exploration responsibly to avoid environmental damage.

Considerations for doing business in the U.S. amid new policies

Engaging in business within the U.S. extends beyond mere financial transactions; it demands a deep understanding of the evolving socio-economic landscape. Key aspects such as wages, inflation, and housing are poised to shift under the new administration's policies, with varying impacts across different societal strata. Parenga highlights these disparities, noting, "For affluent households like ours (bolstered by his spouse's managerial role, which allows them to live comfortably below their means), inflation is somewhat manageable. However, for my middle-class colleagues and friends, the situation is starkly different. Many are experiencing a decline in their standard of living, trapped by rising costs that outpace wage growth."

For expatriates, especially those with substantial capital, the U.S. remains an attractive destination for entrepreneurship. The investment threshold for obtaining an E-2 visa starts at $100,000. Additionally, the O-1 visa caters to individuals with extraordinary abilities in their respective fields, offering another avenue for those looking to start ventures in the U.S. Despite the uncertainty surrounding the implementation of Trump's new policies, the U.S. continues to be ranked among the top countries for business opportunities, awaiting the actual rollout of these policies to understand their implications fully.

Useful links:

E Visas: countries that have signed a cooperation agreement with the United States

Apply for an E2 Visa