What obstacles and opportunities await the channel during the second Trump administration.
The seemingly endless election cycle finally come to an end. The tone of the campaign has made many of us weary and could lead to some unfortunate and awkward moments around our holiday dinner tables! But now it’s time to determine the best path forward, embracing the new opportunities that change inevitably ushers in. Everyone has opinions—and when it comes to politics, especially this year, those opinions have often been conflicting, confusing and quite often contentious.
While much remains uncertain, the federal government is undergoing sweeping changes that will have far-reaching impact on everyone. The White House, Senate and House of Representatives will be under Republican control for at least two years when the next mid-term election will have the makeup of the House and Senate back up for grabs.
What will Republican control mean for the channel? Direct Selling News reached out to thought leaders, industry attorneys, consultants and experts to get their perspective on what may—or may not—happen next during a second Trump administration.
Tariffs
One of the most buzzworthy topics surrounding the new administration is tariffs. Whether tariffs are good or bad for direct selling is a bit of a mixed bag—while short-term pain might exist, there could be long-term rewards.
There can be no discussion of tariffs without mentioning the geopolitical friction it could cause between the US and China. The specter of new tariffs on imports and the reshoring of manufacturing to the US will likely be one of the first focuses of the new administration. Tariffs are a political hot potato and could be used ultimately as a bargaining chip, but considerable bipartisan support for tariffs does exist (particularly on China).
Of course, sweeping tariffs are inflationary and will almost certainly face multiple legal challenges both at home and abroad. Plus, higher prices inevitably lead to consumer dissatisfaction and pushback.
Many direct selling companies manufacture in the US but source raw materials, packaging and printing from China. Higher tariffs on imports could disrupt these established supply chains.
The lack of clarity on what will happen with tariffs makes it difficult to ascertain the best path forward. Companies should consider consolidating domestic operations to reduce their reliance on imported goods. Another strategy would be to explore sourcing from countries with lower tariffs than those proposed on China.
Clay Brewer, Partner at Thompson Burton, a law firm specializing in direct selling, worries that direct selling could become collateral damage and recommends being proactive now to avoid repercussions later. “Direct sales could be caught in the middle due to simply not being top of mind. In the second Trump administration, the Direct Selling Association (DSA) should highly increase its lobbying efforts to promote the industry to those willing to listen and who share the industry’s sentiment on an overly invasive regulatory enforcement.”
Regulation
Conventional wisdom holds that there will be less regulation under Republican administrations, but the reality is more nuanced. Deregulation in general eases compliance costs and bureaucratic red tape. New leadership at regulatory agencies such as the Department of Labor (DOL) and Federal Trade Commission (FTC) could usher in more leniency as well as reduce costs associated with compliance and legal issues.
“The regulatory environment is going to be much more favorable for the industry under the new administration. A potentially significant reduction in regulations should lower the cost of doing business,” Michael Lunceford, Principal at Lunceford/WEBB Government Relations explained.
In his estimation, direct selling won’t be a major focus of the administration, but opportunities created by this election are important to leverage. Direct selling can and should be seen as a champion of aspiring entrepreneurs or small businesses. “We recommend that the industry position itself as the representative of the smallest-of-the-small entrepreneurs—those who want to earn a little extra money to buy school supplies or holiday presents.”
FTC
Changes in leadership will undoubtedly occur at the FTC. Policies under the Biden administration have been less than favorable to direct selling, but the experts agree that there is no reason to immediately celebrate. They expect that initially the status quo will be maintained or that small changes will take place.
The agency is independent and has a history of bipartisan agreement on matters of enforcement. Additionally, it’s important to remember that adverse positions to direct selling have been made in both Democratic and Republican administrations. The new leadership will likely support enforcement but balk at some of the far-reaching initiatives the industry has seen under the Biden administration.
As Lunceford explained, “The agency demonstrated animosity towards direct selling even during the first Trump administration. The chair will change, but the bureaucracy will most likely continue. Many of those who have shared their dislike for the industry are staff who will remain at the agency.”
Bottom line? Entrenched bureaucracy exists, but there are positive signs on the horizon. Hopefully there will be more openness towards direct selling’s history of self-regulation than in the past.
Independent Contractor Status
Distributors have been formally recognized as independent contractors for almost 35 years under federal law and also recognized as such in all 50 states. More than 90 percent of direct sellers choose to work part time on their own schedules with no presumption of actual employment by direct selling companies.
Under the Biden administration, attempts were made to create that presumption of employment. Most of this was driven by the administration’s ties to organized labor and was meant to address worker misclassification in other industries. It is imperative for direct selling’s survival for distributors to maintain their independent contractor status.
The election takes a lot of the wind out of the sails of this movement, but that doesn’t mean it’s a dead issue. While the executive and legislative branches are under Republican control, lobbying efforts should be made to pass laws preserving this status. Complacency is the worst outcome.
According to leading direct selling attorney Brent Kugler, Partner at Scheef & Stone, the new administration should be open to this type of outreach. “I expect the new administration to be receptive to feedback and criticism from the business community and pursue initiatives that are more pro-business and beneficial to companies that market products and services through independent contractors.”
Non-Compete Agreements
The FTC’s effort to ban non-compete agreements under the Biden administration was troubling to the industry. An August 2024 ruling by a US District Court judge in Texas effectively blocked the final rule that would implement the Commission’s non-compete ban.
Judge Ada Brown stated that the FTC had exceeded its statutory authority, and that “the Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition…instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious.”
In its original Rule approved in April 2024, the FTC described non-competes as an “exploitative practice” that prevent workers from starting new businesses or switching jobs, effectively forcing them to stay with their current employer. It leaned heavily on language from the FTC Act, specifically citing “unfair method of competition” as the basis for the violation.
The final ruling from Judge Brown does not prevent the FTC from prohibiting non-competes or delivering enforcement actions, but stressed it must do so on an individual, case-by-case basis. The FTC’s proposed non-compete is currently pending on appeal.
“While this was a big deal for the industry, and I believe the rule was issued outside the bounds of FTC power, the truth of the matter is that it will not impact the direct sales industry much,” shared Brewer. “Non-solicitation holds the power as opposed to non-competes. I think non-competes are slowly moving out of favor from a business perspective.”
Taking Action
While no one can predict the future, it’s clear that the changes on the horizon could be beneficial to the channel and present the growth opportunities direct selling needs. So, what should you as a leader of a direct selling company be doing right now? According to Lunceford, the answer is obvious—getting involved.
“Companies need to have continual, active engagement and maintain relationships with elected officials on the Hill—regardless of who is in the administration. One means of doing so for companies in states that have a concentration of direct-selling companies is to replicate the Utah Direct Selling Coalition. Texas and Florida are ideal locations for opportunities like this to form and organize into networking groups. Such coalitions are complementary and supportive of the government relations activities of the DSA.”
The timing couldn’t be better. “We recommend developing and maintaining relationships—on both sides of the aisle—well in advance of needing to activate them,” explained Lunceford. “It’s a long game. We recommend companies prioritize continual engagement.”
The good news is that the election results were clear, and there will be a peaceful transfer of power, preserving our democracy and traditions. Hopefully legislatures on both sides of the aisle can now bring about a new period of prosperity. As industry legend John Fleming so eloquently shared, “Now that we know the results of the election, it is time to unleash all of the optimism and energy and go to work on what matters most.”
Digital First article from the upcoming January 2025 issue of Direct Selling News magazine.
