How Tariffs and Industrial Policy Collide: Navigating the Effects of the “One Big Beautiful Bill" and Trade Policy on U.S. Businesses
Key Takeaways:
The "One Big Beautiful Bill" Act aims to stimulate U.S. manufacturing through incentives and federal investment but is undercut by conflicting tariff policies that raise input costs.
Tariffs imposed during the Trump administration remain in place for many imports, creating price pressures that particularly hurt small- and mid-sized manufacturers.
Businesses navigating U.S. trade and industrial policy need to manage both supply chain volatility and shifting regulatory environments.
Tax planning and entity structuring are critical tools for managing the financial uncertainty caused by competing federal policies.
Business owners and professionals in Maryland, D.C., and Virginia should reevaluate risk exposure, especially if tied to manufacturing, importing, or supply chain logistics.
Federal policy is never simple, and recent developments in trade and industrial legislation create new twists for businesses across Maryland, Virginia, and Washington D.C. While the goal of energizing American manufacturing is shared widely, the tools in play do not always operate in harmony.
On the one hand, Congress has introduced legislation such as the "One Big Beautiful Bill" Act—an effort to invest in domestic manufacturing by offering tax credits, funding infrastructure, and supporting R&D. On the other hand, tariffs implemented during the Trump administration remain active. While intended to pressure foreign trade partners and protect U.S. industries, these tariffs can raise input costs and ultimately hurt the very manufacturers that government investments aim to help.
For business owners, high-net-worth individuals, and professionals tied to the industrial or importing sectors in the DMV region, the disconnect between legislative efforts and trade barriers presents a set of complex legal and financial considerations. At Thienel Law, we help clients align tax planning, business strategy, and regulatory compliance to withstand these conflicting headwinds.
Let's break down how these policies affect your bottom line—and what actions are available to protect your assets and operations.
Understanding the "One Big Beautiful Bill" Act
Despite its informal moniker, the "One Big Beautiful Bill" represents a serious legislative push to accelerate U.S. manufacturing. Inspired by a mix of economic stimulus and industrial renewal goals, the bill includes:
Incentives for domestic production of critical goods.
Infrastructure spending aimed at updating ports, highways, and broadband.
Research and development tax credit expansions.
Training program funding intended to modernize the skilled labor force.
The bill sends a positive message to U.S. companies: build here, invest here, and you will be supported. For small and mid-sized manufacturers in regions like Maryland or Virginia, access to incentives could facilitate growth, improve hiring, and attract investment.
However, this optimism faces headwinds in the form of ongoing tariffs.
The Lingering Effect of Trade Barriers
President Trump's tariff policies were designed to rebalance trade relationships and encourage domestic industry. But the approach relied heavily on levies applied to imported materials, components, and finished goods from key trading partners—primarily China.
These tariffs remain in effect and are now superimposed on a new policy environment that encourages domestic activity. The rub is clear: tariffs raise input costs for manufacturers who must import raw materials or parts not produced domestically at scale. Steel, aluminum, semiconductors, batteries, and specific machinery remain priced above historic norms because of these continuing import duties.
For manufacturing companies based in Maryland, Virginia, or Washington D.C., these costs may exceed the benefits offered by domestic investment incentives. It's a classic instance of mixed signals from the federal government: invest in production, but accept higher input costs and erratic supply disruptions.
Case Example: A Mid-Sized Virginia Electronics Manufacturer
Consider a hypothetical LLC in northern Virginia that assembles high-efficiency commercial lighting components. The company sources certain circuit boards from East Asia because domestic suppliers cannot meet demand at the required price point.
Despite qualifying for R&D tax credits under the new legislation, the company's profitability is squeezed by 25% tariffs on imported components. While the "One Big Beautiful Bill" offers some assistance through credits and grants for expansion, the baseline cost to produce each unit has risen since the tariffs took effect. The result? Lower margins, delayed hiring, and difficulty passing savings on to clients.
Entities structured as LLCs or S-corporations may need to weigh these realities when preparing tax filings, planning capital purchases, or drawing compensation for owners. Navigating these competing forces calls for legal and financial alignment.
Tax Strategy: What Should You Do Now?
The current environment requires proactive tax and legal planning, especially if your supply chain or business model intersects with global trade. Here's where we focus with clients at Thienel Law:
1. Entity Structure Assessment
Ensure your entity type—LLC, S-Corp, or C-Corp—is still aligned with your growth strategy and tax liability. Sometimes restructuring may be advantageous based on how you capture tax credits or manage global income.
2. Cost Segregation and R&D Credit Optimization
Our firm works with CPAs and tax specialists to ensure that all qualifying activities under R&D credits are captured, especially for manufacturers investing in process improvements or new technologies.
3. Tariff Impact Accounting
Imports subject to tariffs should be identified and tracked carefully. We help clients model scenarios for alternative sourcing or pass-through pricing and integrate this into annual tax forecasting.
4. Use of Strategic Partnerships
Some firms benefit from joint ventures or transnational partnerships that allow them to license production in lower-tariff jurisdictions. Ensure that legal agreements, revenue sharing, and IP rights are fully compliant and protect your interests.
5. Estate and Succession Planning for High-Net-Worth Business Owners
For owners approaching retirement or considering exit strategies, the volatility created by tariff policy and industrial investments must be factored into estate and succession planning. A devaluation of business assets due to rising input costs could complicate generational transfers.
Beware of Compliance Gaps
Conflicting federal policies can also lead to compliance confusion. For example, a business might receive federal funding or tax credits to expand production, while concurrently importing foreign components subject to sanctions or environmental restrictions. In such cases, businesses expose themselves to regulatory and reputational risk.
Our firm routinely advises clients conducting due diligence for grant compliance, as well as for procurement rules that apply when using federal subsidies. For clients operating in government-contracting spaces—particularly common in the D.C. region—these risks are amplified.
Example: A Maryland-based defense subcontractor builds radar components with a foreign-manufactured chip that is later found non-compliant due to export restrictions. Even if tariffs were paid, the company could lose eligibility for government work and face civil penalties.
Here, proactive compliance reviews and contract management tools are essential risk management strategies.
The DMV Region's Strategic Opportunity
Even as national policy sends mixed messages, the DMV (D.C., Maryland, Virginia) region holds strategic advantages in navigating these waters:
Access to legal, logistics, and trade institutions in Washington D.C.
Established infrastructure and workforce in suburban industrial zones.
A politically active constituency that can give voice to local business concerns at the national level.
Businesses in this region are more likely to be early adopters of policy-related funding and credits—but they're also more exposed to trade volatility, making local legal support essential.
Final Thoughts: Aligning Policy and Planning
It's worth noting a unique insight: the U.S. may be entering an era where industrial policy returns to the forefront of economic strategy. But as we've seen, good intentions in one area of federal policy can be undermined by legacy measures in another.
For business owners, this makes strategic planning more important—not less.
Whether you're managing a multi-state partnership, sourcing goods across borders, or scaling a family-owned manufacturing business, aligning your tax, legal, and operational choices with conflicting federal signals is not a task for the uninformed.
If you're unsure how these evolving policies affect your business or personal financial outlook, we're here to help. Schedule a consultation with Steve Thienel to receive clear, confident advice tailored to your goals and your industry.