Trump and start-up America | Financial Buzz

Trump and start-up America

There has been much confusion regarding President Elect Donald Trump’s policy-or lack of- regarding start-ups in his administration. His remarks are mostly contradictory. This has left many workers and entrepreneurs in the start-up community in confusion.

All hope, however, is not lost. Despite a singular lack of consistency, a few important initiatives are repeated by Trump throughout his campaign. Most of them have the capacity to negatively impact start-ups in the technology sector. They could hurt innovative business too.

Issue of closed borders

According to Jeffrey Gordon, professor at Columbia University, Trump’s wish to shut out immigrants could badly affect tech companies. They will find it harder to hire quality talent from outside the country. Visa restrictions will be imposed and there will be a shortage of skilled foreign talent. The existing talent can then be available at higher prices and the industry dynamics will become slower with time. The most visible damage will be the technology companies which bring ion highly skilled personnel on H-1B visas. This visa permits immigrants to do gainful work inside the United States. Trump and like-minded people accuse these companies of importing cheap labor, while the companies say they like to hire the best available talent.

What gets lost in the din is that these same workers open their own companies. According to National Foundation for American Policy, immigrants are making up US businesses in large numbers. The Foundation has reported that that among 87 startups valued in excess of $1 billion, 44 of them were started by immigrants. It is also found that immigrants form a major chunk of the talent pool in 70 percent of the total startups. Reducing the H-1B visa numbers will have a dangerously negative impact on the tech economy. It will stymie the business numbers which emerge every year.

In case of Trump, there are indications that his views could be less strident than what was originally thought. In a media interview, the President Elect has admitted that he may take a softer view as the United States needs to have talented people.

Limiting overseas manufacturing

Trump’s attempts to curb manufacturing overseas could scuttle start-ups specializing in hardware too. Technology companies which want to produce hardware mat worry about impact on the supply chains. This will be applicable for established companies like Apple too. If Trump goes forward with his plan, imports and outsourcing jobs will be saddled with 20 percent and 15 percent taxes respectively.