Trade Alert: One Big Beautiful Bill – Opportunities and Risks for U.S. Trade and Global Supply Chains

Trade Alert:

One Big Beautiful Bill – Opportunities and Risks for U.S. Trade and Global Supply Chains

July 2, 2025

What is the One Big Beautiful Bill Act (OBBBA)?

In July 2025, the U.S. Congress introduced the One Big Beautiful Bill Act (OBBBA)—a sweeping legislative proposal designed to revitalize American manufacturing, support small businesses, and reinforce domestic supply chains.

While the bill’s name suggests simplicity and unity, the actual content of the legislation is far-reaching and complex. At its core, OBBBA aims to create long-term incentives for U.S.-based businesses, including:

• Making the Section 199A deduction permanent for pass-through entities

• Expanding estate tax exemptions to protect family-owned businesses

• Providing tax credits and deductions for companies that repatriate manufacturing and distribution operations to U.S. soil

Supporters hail the bill as a bold step toward economic nationalism, while critics warn it could disrupt international trade, inflate domestic costs, and create unintended burdens for smaller import-reliant businesses.

Key Benefits of OBBBA: Tax Incentives and Domestic Growth

1. Permanent Section 199A Deduction

The OBBBA proposes making the 20% pass-through income deduction under Section 199A a permanent fixture of the tax code. This deduction has been a lifeline for LLCs, S-corporations, and sole proprietorships, helping them remain competitive against C-corporations.

By securing this deduction long-term, the bill aims to:

• Boost small business reinvestment,

• Support domestically-based supply chains, and

• Encourage reshoring of manufacturing operations.

2. Enhanced Estate Tax Exemptions

Family-owned firms and generational businesses stand to benefit from expanded estate and gift tax exemptions. This change would:

• Ease succession planning,

• Preserve long-term family ownership, and

• Mitigate forced sales of assets to meet tax obligations.

This provision is expected to gain support from wholesale distributors, family farms, and multi-generational manufacturing firms.

Potential Drawbacks: Importers and Consumers Face New Challenges

While OBBBA delivers several pro-business benefits for U.S.-based operations, it also presents notable risks, particularly for importers, small-to-medium enterprises (SMEs), and consumers.

1. Heightened Pressure on Importers

The bill complements recent tariff escalations on imported goods from several foreign nations. While tariffs aim to encourage domestic production, they also raise input costs for companies dependent on global supply chains.

Importers—particularly those in apparel, electronics, automotive parts, and food products—may face:

• Shrinking margins,

• Increased compliance costs, and

• Disrupted supply contracts with overseas partners.

2. Unequal Impact on SMEs

Larger corporations may have the resources to absorb or adjust to higher duties and domestic sourcing costs. However, many SMEs lack the flexibility or capital to pivot quickly. Without global sourcing, these businesses could struggle with:

• Higher production costs,

• Limited supplier networks, and

• Reduced pricing competitiveness.

Ironically, a bill designed to support small businesses may unintentionally undermine those most dependent on international trade.

3. Consumer Price Implications

OBBBA’s protectionist tilt, when paired with broader tariff policy, could lead to:

• Higher retail prices for imported goods,

• Reduced access to budget consumer goods, and

• Strained purchasing power, particularly for low- to middle-income households.

Household staples, clothing, electronics, and imported foods could all see price increases if businesses pass along the higher costs of compliance, labor, and materials.

Trade Policy at a Crossroads: Nationalism vs. Global Integration

The introduction of the One Big Beautiful Bill Act places the U.S. at a critical decision point in its trade and economic policy.

On one hand, OBBBA signals a commitment to rebuilding American industry, enhancing self-sufficiency, and minimizing reliance on foreign nations—especially in strategic sectors like pharmaceuticals, semiconductors, and heavy manufacturing.

On the other hand, it risks decoupling the U.S. from global trade ecosystems that have historically delivered cost savings, innovation, and supply chain efficiency.

This tension echoes a broader trend in global economics: the shift from globalization to regionalization, as nations reassess the security and stability of their supply chains.

Supply Chain Implications: Time to Rethink Strategy

For businesses engaged in cross-border trade, the OBBBA is not just a tax bill—it’s a trigger for proactive supply chain review.

Here’s what companies should begin evaluating now:

1. Cost-Benefit of Domestic Sourcing

Assess whether shifting production or assembly operations to the U.S. aligns with long-term tax advantages offered under OBBBA. This analysis should weigh:

• Upfront transition costs,

• Tax savings, and

• Ongoing labor, infrastructure, and logistics implications.

2. Tariff Exposure Modeling

Businesses reliant on imports should conduct a tariff exposure audit to understand how OBBBA—combined with existing or future tariff regimes—will affect profitability.

3. Supplier Diversification

Consider strategies to diversify or regionalize suppliers, minimizing dependence on any one country or port of entry.

4. Scenario Planning and Cash Flow Impact

Prepare financial models for best-case and worst-case supply chain outcomes under the bill, including:

• Tariff increases,

• Delays in tax relief, and

• Changing compliance requirements.

Compliance, Tax & Trade: Schulz Trade Law Is Here to Help

At Schulz Trade Law PLLC, we specialize in the intersection of international trade law, customs compliance, and tax-related impacts on cross-border business.

Our advisory services include:

• Customs & import strategy reviews

• Tariff mitigation and sourcing optimization

• Country-of-origin and classification support

• Regulatory compliance under evolving U.S. trade legislation

• Strategic planning for reshoring, FDI, and supply realignment

We understand that legislation like OBBBA doesn’t just affect spreadsheets—it affects business models, market positioning, and long-term viability. Whether you're a family-owned manufacturer, a midsize importer, or a global enterprise, we provide tailored, timely guidance to help you adapt and thrive.

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At Schulz Trade Law PLLC, we are closely monitoring these developments and providing clients with strategic guidance to mitigate risks, evaluate tariff exposure, and adapt compliance strategies. Our team is ready to deliver timely, tailored support to navigate these changes.

Contact us today to ensure your business is prepared for the evolving trade landscape.

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