Big Story: Trade uncertainty revived amid new threats, moving deadlines
The Trump administration’s erratic trade moves are once again inviting trade barriers that will make it harder for startups to scale globally. While the rollout of reciprocal tariffs proposed in April has been delayed again, the administration’s moves—including letters to trading partners and threats to use national security authority to impose sectoral tariffs—underscore the continued lack of clarity and coordination in its trade policy.
This week, President Donald Trump again delayed the rollout of proposed ‘reciprocal’ tariffs from July 9 to August 1, prolonging uncertainty around the global trade landscape. Trump also kicked off a flurry of letters to trading partners that renew or increase tariff threats, risking productive relationships with key trading partners. Trump also signaled openness to significantly expanding sectoral tariffs, floating the idea of imposing 200 percent tariffs on pharmaceuticals under national security powers, a move that could prove precedential for sectors that are critical to startups, including semiconductors. The administration has already initiated an investigation into the national security implications of semiconductor imports. Taken together, these actions are likely to increase costs, inject more uncertainty—especially as several of the administration’s moves are being challenged in court—and invite the kind of retaliation that harms startups.
Startups looking to grow globally could soon face retaliatory measures that disproportionately raise their costs and limit their ability to grow, including digital services taxes (DST) or discriminatory enforcement aimed at U.S. companies. While the administration has announced tariff-related “deals” with countries like Vietnam and the UK, most have been light on details and have sidestepped digital trade concerns entirely. Even in past months where wins have been achieved—like Canada halting collection of their DST—the persistent uncertainty leaves startups unable to grow abroad. Startups need certainty, and reliable access to foreign markets to grow into competitive global companies, and that requires consistent, reasonable trade policy.
Policy Roundup:
Tax bill passes with implications for innovation ecosystem. President Trump signed the One Big Beautiful Bill Act on July 4. The sweeping package touches Medicaid, broadband, and energy subsidies, with much of its focus on extending provisions from the 2017 Tax Cuts and Jobs Act (TCJA). It also includes several startup-supportive measures including a return to immediate deductions for the full cost of U.S.-based research expenditures and an expanded Child Tax Credit, increasing the TCJA-era amount from $2,000 to $2,200 per child starting this year. However, the bill’s passage introduces new federal loan restrictions—on repayment plans and borrowing limits for graduate programs—which may discourage students from pursuing specialized education or joining startups that often can’t offer the salaries of larger companies. Student loan debt deters many potential founders—especially underrepresented founders who already face significant challenges in accessing needed capital—from entering the startup community.
California amends AI resource, whistleblower bill to include developer obligations. California lawmakers amended AI-focused legislation this week, adding new obligations for large model developers, calling to mind the fraught debate over eventually-vetoed frontier model legislation, SB 1047 (2024). The bill now includes requirements for developers to publish safety and transparency reports, protections for whistleblowers—including those that aren’t employees, like independent contractors—and a public compute cluster for research and startup use called CalCompute.
Immigrants contribute positively to U.S. economic growth. A new study released by the Federal Reserve Bank of Dallas examines how increasingly restrictive immigration policy will dampen economic growth. While the authors focus on unauthorized immigrants, the study underscores the importance of immigrant talent to the broader economy—including the startup ecosystem, where immigrant founders and workers play a key role in moving U.S. innovation forward.
Patent office review denials continue. Under Acting Director Coke Stewart, the U.S. Patent and Trademark Office is reshaping how it decides whether to review patents at the Patent Trial and Appeal Board through inter partes reviews (IPRs). Recent policy changes and dozens of decisions in May and June have strengthened the settled expectations doctrine, making it harder to review older patents. The shift could raise legal and financial risks for startups, which often depend on IPRs to defend against low-quality patents. In a new op-ed, Engine explored how preserving accessible, affordable pathways for startups to challenge patents is critical for startup innovation.
On the Horizon:
TUE 7/15: The House Committee on Small Business will convene a hearing to discuss the Small Business Administration’s approach to regulatory burdens at 10:00 AM ET.
WED 7/16: The House Ways and Means subcommittee on oversight will convene a hearing to discuss digital assets at 9:00 AM ET.
WED 7/16: The House Judiciary subcommittee on crime and federal government surveillance will convene a hearing to discuss AI policy at 10: 00 AM ET.
WED 7/16: The Senate subcommittee on crime and counterterrorism will convene a hearing to discuss copyrighted works and AI training at 2:30 PM ET.
THU 7/17: Senate Health, Education, Labor, and Pensions Committee will convene a hearing to discuss independent contractors at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: Somerville, Massachusetts. Chris Madden is utilizing his background working with startups to build Stump, a platform for local political candidates to reach voters in an individualized, AI-powered “Ask Me Anything” style. His mission is to democratize democracy. We sat down with Chris to discuss his company, determining a candidate's eligibility for the platform, and the looming threat of hate speech on content platforms.
