Navigating Uncertainty: How Executive Orders Are Shaping Your Business
With every new administration comes change. However, the current presidential administration is moving at a speed surpassing previous administrations, with President Trump issuing more than 70 executive orders in his first month in office. Many of the orders have been unclear, requiring memos to clarify them. Others have been paused or halted by court challenges.
Local businesses and individuals are being impacted by uncertainty as executive orders are implemented. This article will clarify the effects of the executive orders that are most likely to impact your day-to-day operations, as well as provide some general advice on how to deal with the effects.
Imposing Tariffs
The simplest type of executive orders — but ones with a broad impact on our business community — are those imposing tariffs. The Port of Baltimore is a major economic hub with millions of tons of goods shipped in and out yearly. These tariffs could increase prices for those goods and disrupt supply lines, especially as other countries threaten to impose their own tariffs.
Action steps:
- Lock in agreements with subcontractors and suppliers where possible to ensure you maintain favorable prices.
- Consider adding language for price increases to your future contracts. This language could be simple generic price escalation clauses or tying prices into an index to ensure you maintain your margins.
- Consult a tariff attorney if needed to analyze your products and supply lines and the possible impact on them.
DEI Initiatives
The next type of executive order targets Diversity, Equity, and Inclusion (DEI) programs. While these orders are currently being challenged in court, some have already partially gone into effect. The order includes a requirement that federal contractors and grantees must certify that they do not operate any such DEI programs.
Action step:
- It’s vital to comply in all respects with applicable federal anti-discrimination laws. Programs that could be deemed illegal could open you to potential false claims liability. As such, we recommend consulting your legal counsel.
Stop-Work Orders
The final category of executive orders impacting the business environment are the broadest, dealing with cutting waste and fraud in the government, which has led to many stop-work orders on current contracts. It is important to know your options and responsibilities if your company has received a stop-work order on a contract. All stop-work orders can only last for a maximum of 90 days before they must be lifted, or the contract will be terminated.
Action steps:
- Mitigate costs during this time, as is required.
- Document costs and mitigation efforts during this time. You can submit a Request for Equitable Adjustment (REA) to be reimbursed after the stop-work order ends. Administration costs and other internal costs can be eligible for REAs.
- Refer to the Contract Disputes Act to see other actions available to you besides a REA.
The above three categories of executive orders are the ones most likely to affect you on a short-term basis. The advice provided does not constitute all your options. Please see our detailed article on stop-work orders for more information on the topic.
We are always happy to answer questions you might have.
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