With proposed tariff changes and the GOP’s tax bill progressing through Congress, businesses in Orange County are experiencing uncertainty that’s delaying key decisions. Many are postponing transactions—the rate of local mergers and acquisitions has slowed down considerably since Jan. 1, and certain investments have been put on hold, except for those in the execution phase.
With tariff threats, many businesses have been faced with the decision to accelerate or delay inventory purchases, which can impact working capital and liquidity. Small and mid-size businesses are particularly vulnerable to instability, often lacking the resources to absorb unexpected inventory costs.
Strategic decisions that typically sit within supply chain or operations teams are being escalated to the boardroom. Boards are increasingly involved in inventory and pricing strategies due to the high stakes and volatility surrounding tariffs.
Meanwhile, businesses are closely watching several areas of the tax bill, including changes to qualified business income (QBI), which could affect owners of pass-through entities—such as S corporations, partnerships and limited liability companies (LLCs).
The QBI deduction under section 199A would be permanently extended and increased to 23% with new phase-in rules on the wage and investment and specified service trade or business (SSTB) limitations to become effective after Dec. 31, 2025.
OC’s “green tech” sector is closely watching potential changes to energy credits and the possible reinstatement of research and experimentation (R&E) deduction. The proposed changes would allow full deductibility of domestic research expenses from 2025 to 2029, potentially spurring investment innovation.
Despite a cautious environment, early signs point to strategic planning picking up.
Companies are beginning to position themselves for future moves, particularly as the regulatory picture becomes clearer. This could mark a positive turning point for the M&A landscape.
Accounting and advisory firms continue supporting clients through these shifts, a role expected to grow even more critical when the final tax bill is enacted.
