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Major Corporations Stay Silent as Supreme Court Weighs Trump’s Tariffs

America’s largest companies have gone quiet as one of the most consequential economic showdowns of the decade hits the Supreme Court. The battle over Donald Trump’s global tariffs isn’t being led by Wall Street or Silicon Valley. It’s being waged by small businesses, the kind that can’t afford to wait out the uncertainty or absorb the hit of another presidential trade gambit.

The Supreme Court will hear arguments on Wednesday on whether Trump’s “Liberation Day” tariffs and his unilateral duties on goods from China, Mexico, and Canada violate presidential authority.

In their case, businesses like a family-run toymaker from Illinois, a wine importer from New York, and a scattering of other modest firms say they have been suffocating under unpredictable import duties. Victor Owen Schwartz, founder of the wine and spirits importer V.O.S. Selections, told CNN he felt compelled to speak up.

“I was shocked that those with much more power and money did not step up. So when I was afforded the opportunity to speak for small American businesses, I took it.”

President Trump invoked a 1970s emergency statute, the International Emergency Economic Powers Act (IEEPA), to reshape global trade in the name of tackling trade imbalances and fentanyl trafficking. While the law allows a president to “regulate importation” in emergencies, it never explicitly mentions tariffs, and that omission is now at the heart of the fight.

The plaintiffs argue the tariffs have driven up costs and created crippling uncertainty. “It’s an asphyxiating tax,” said Rick Woldenberg, CEO of Learning Resources, one of the lead plaintiffs.

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“I’m not targeting Mr. Trump because I’m not a politician. I’m a taxpayer who’s been hit with an unlawful tax.”

Despite the far reach of the case, America’s corporate heavyweights are mostly staying out of it. That silence, experts say, likely stems from a fear of political retaliation.

“The federal government has immense leverage and immense power and can upend your business with a tweet or a tax investigation,” said Georgetown Law professor Gregory Shaffer.

“I think there’s a sense that companies wanted to be more careful with this administration.”

It wouldn’t have been the first time big business has weighed in on controversial legal fights. In recent years, dozens of corporations, including Apple, Walmart, General Electric, and Intel, have filed friend-of-the-court briefs on social or economic issues. But this time, there’s no such chorus.

“Anyone who wants to speak out against this is going to be in the pain cave,” said Cassie Abel, founder and CEO of women’s outdoor brand Wild Rye. Abel, who joined an amicus brief opposing the tariffs, said the fear of blowback from Trump’s camp is real, especially after large retailers faced his public ire for linking tariff costs to price hikes.

Trump’s legal team insists the IEEPA gives him wide latitude to impose tariffs, even if the term isn’t spelled out. The administration’s top appellate lawyer, Solicitor General D. John Sauer, warned that striking down the tariffs could have “catastrophic consequences” for the economy.

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“Plaintiffs would unwind trade arrangements worth trillions of dollars, as President Trump has leveraged the IEEPA tariffs into negotiated framework deals with major trading partners—including the European Union, the United Kingdom, Japan, South Korea, and now China—that address underlying causes of the declared emergencies.”

Some major companies have found quieter ways to protect themselves by securing exemptions or rerouting supply chains to minimize damage. Others, like Apple and Home Depot, have not commented on why they’ve stayed on the sidelines this time.

Trade lawyer Gregory Husisian said many large corporations are calculating whether joining the case would add anything new to the arguments already made by smaller players. If you don’t have a fresh legal angle, he said, “What do you really gain by being the person who sticks your neck out?”

The Chamber of Commerce and several other industry groups have broken ranks to file briefs urging the court to undo the tariffs. They’re joined by nearly three dozen former federal judges, national security officials, and smaller trade groups who say the emergency powers law was never meant to let a president unilaterally reshape global trade.

For the plaintiffs, the case has become symbolic, as small businesses face off not just against Washington but also against the silence of their larger counterparts.

Meanwhile, Trump has avoided directly attacking the companies behind the lawsuit, perhaps wary of alienating the small-business community, which enjoys bipartisan sympathy. Whether that restraint lasts may depend on how the court rules.

PPP Loan

Why Some Businesses Are Hesitant To Apply For PPP Loan Forgiveness 

This week, the Small Business Administration opened up their forgiveness portal for the Paycheck Protection Program (PPP) loans. The CARES Act initially made these loans available for small businesses who were struggling to stay afloat during the pandemic. The Act went into effect in the beginning of April, and since has dealt out more than 5 million approved loans which equated to $525 billion. 

To qualify, small businesses had to show that at least 60% of the loan would be going towards payroll costs for employees. The repayment terms of these loans are also relatively casual in terms of federal loans, as most firms will only pay an interest rate of 1% and have at least a six-month grace period before needing to start payments. Loans that were given before June 5th must be repaid in two years while those dealt out after have five years. 

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Even with all of these seemingly attractive qualities, accountants nationwide are noting that many small businesses are choosing to sit out this round of PPP loans after the initial round of loans began going more towards large corporations and wealthier employers who didn’t really need the financial support as badly. 

Additionally, many small businesses are still asking Congress the same question in regards to these loans with no real answer: will expenses covered by these PPP loans be deductible on future tax returns? Ann Kummer is a Certified Public Accountant in New York who claims to be giving a lot of her clients the advice to wait before applying for a federal loan. 

“My advice to all of these clients is that you don’t want to be the first to rush into the forgiveness process. Things will probably continue to change, do you really want to be the guinea pig?”

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Many small businesses feel the same way, especially considering so much change has already occurred in terms of the pandemic and its impact on the economy. There’s still no word from Washington D.C. on what the next Covid-19 relief bill will look like either, something many Americans have yet again been waiting for. 

According to the IRS, forgiveness of the loan will be tax-free, but business owners who take out a PPP loan will not be able to write off expenses that in any other context would be deemed deductible if they use the PPP funds to cover that cost. However, many Congress members disagree with the IRS’ claims and want small businesses to be able to deduct those costs, making this one of the many points of contention that’s delaying the release of another relief bill. 

Overall, many business experts and accountants nation-wide are urging their clients to hold off and wait in terms of applying for one of these PPP forgiveness loans. While many businesses are suffering now, depending on how much this loan program changes the damage could become a lot worse for them down the line. 

Experts recommend that all businesses maintain a separate business account for all of their loan proceeds so they’re able to see exactly what they’re receiving and when they are spending it. Additionally all businesses should maintain any and all documents that show how their funding has been spent throughout the duration of the pandemic. This way, no matter how much the pandemic and the forgiveness program changes in the coming months, businesses will have a formal record of spending and receiving.

Market for Food

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Small Business working during COVID-19

Small Businesses Demand Greater Financial Protections During Coronavirus Pandemic

As the many small businesses of America struggle to stay afloat during this pandemic that requires everyone to stay inside, the Small Business Administration (SBA) is working to ensure that they’re as protected as possible to survive this economic crisis. The SBA recently issued a new set of guidelines regarding their loan system that’s meant to make it less likely for big businesses to access the next round of funding that the US government deals out as a part of its small business relief program.

After the first round of small business payments were dealt out by the government, many individuals expressed their outrage online that so many large companies in the US were able to access the resources and thus take it away from actual small businesses that need the money. There are currently still thousands of small businesses across the country that haven’t received any sort of financial protections from the government, while hundreds of millions of dollars in loans have already been given to larger corporations. 

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According to the SBA, any companies now applying for coronavirus relief funding, referred to as the Paycheck Protection Program or PPP, must certify that the loans are necessary, and the only option for the business in terms of financial compensation. 

“Borrowers still must certify in good faith that their PPP loan request is necessary. It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification,”  the SBA said.

The initial round of funding dealt out $350 billion to various companies throughout the US. For the second round, an additional $310 billion will be given out to hopefully new small businesses that need it, however, industry executives aren’t expecting this fund to last that long, as the first round of PPP payments was finished after a little over a week. 

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Helping small businesses stay alive was actually president Trump’s administration’s main goal when creating the $2 trillion-plus economic response fund for the coronavirus pandemic. During the initial round of funding is when small businesses became angry, however,  as large restaurant and hotel companies were able to apply for loans up to $10 million, and a majority of the ones that did were companies that were worth more than $100 million in stock. 

JPMorgan Chase and Bank of America have been two of the bigger corporations dealing with the ins and outs of these small business loans for most companies throughout the country, and thus they’re also receiving the most criticism for the first round of payments. Small businesses are claiming that this is a classic example of corporations looking out for one another while disregarding smaller businesses struggling to survive, a claim that JPMorgan has denied.

In the new SBA guidelines, the Administration is appearing to allow banks to rely on the small business claims exclusively as evidence for why they need the loan. However, the guidelines also state that any bank that dealt out a PPP loan to a larger public company in the initial round of payments can avoid any sort of repercussions by returning the relief loans within the next two weeks so the money can be redistributed.  

Hopefully these new guidelines help the millions of small businesses across the US survive to see this pandemic end and thrive once we return to a world of normal local retail therapy.