In 2025, small businesses will face a mix of opportunities and challenges in the evolving economic landscape of the United States. While the economy continues to grow, inflation and regulatory uncertainty remain key concerns for business owners nationwide.

In this CO— Small Business Update, Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy at the U.S. Chamber of Commerce, offered insights into critical issues impacting small businesses this year. Bradley’s conversation with Jeanette Mulvey, Vice President and Editor-in-Chief of CO—, offers a roadmap for small business success in the year ahead.

Navigating the economy and regulatory changes as a small business

Small businesses are facing a particularly uncertain regulatory environment under the new administration. The expiring provisions of the 2017 Tax Cuts and Jobs Act could result in significant tax increases for the 2025 tax year unless they’re extended. The Trump administration is reducing regulatory burdens in other areas, though, which Bradley believes will ultimately benefit businesses.

“We're going to … see a significant rollback in the regulatory burden imposed on businesses,” said Bradley, who cited labor laws, overtime rules, and access to credit as examples of where this is likely to happen.

The economy will remain a challenge for small businesses in 2025. Bradley noted that inflation has slowed compared to previous years, but small businesses still face rising prices.

“We had a pretty good year in terms of overall economic growth … and while we've been able to bring down the rate of increase in prices, prices are still … going up faster than we want,” explained Bradley. “I think our biggest challenge economically in 2025 is finishing the fight against inflation.”

[Read more: 5 Small Business Inflation Busting Strategies]

Meanwhile, the high interest rates imposed to combat inflation are impacting small businesses' borrowing costs and access to capital.

“[High] interest rates … make the cost of capital … more expensive,” Bradley said. “It also means that the interest you can earn on deposits … is higher, and so it tends to be an incentive to reduce lending. There's just generally less credit in the economy.”

Bradley advised small businesses to stay proactive about upcoming regulatory changes, work with professional advisors to identify potential impacts on their businesses and plan ahead to minimize surprises.

Adapting to workforce shortages and tariffs

Industries like retail, health care, hospitality, and construction are growing quickly, creating numerous opportunities for small business expansion. However, demographic shifts and baby boomer retirements continue to create talent gaps.

Bradley stressed the need for immigration reform to grow the workforce.

“Your ability to expand your business, … [and] meet consumer demand today is constrained by your lack of workers,” he said. “We … need more people with legal work authorizations to be able to work in the United States, and … that means increasing legal immigration.”

I think our biggest challenge economically in 2025 is finishing the fight against inflation.

Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy, U.S. Chamber of Commerce

Another challenge for 2025 is the potential expansion of tariffs, particularly for small businesses that rely on international supply chains. Bradley explained that tariffs add a "tax" on imported products before they even reach the market, ultimately raising prices for businesses and consumers alike.

Bradley encouraged small businesses to brace themselves against potential changes by the Trump administration by assessing their supply chains.

“Can you still afford the product? Can you pass along the costs? Can you source the product from somewhere else?” he advised.

Preparing for quick changes in tariff policies helps businesses minimize disruptions and protect their bottom line.

The opportunities and challenges of AI adoption

Small businesses are increasingly leveraging artificial intelligence for productivity and innovation, particularly in customer management, design, and operational efficiency. Bradley cited a 2024 U.S. Chamber survey that found that 40% of businesses directly use generative AI in their day-to-day operations (up from 23% in 2023), and many more are using programs built on AI.

“If you're using a … system to manage your customer database [or] do your targeted advertising, the services that you are using use AI in the background. So, virtually every small business in America today is using AI,” he said.

Bradley expressed concern over pending and potential AI regulations, such as those in Colorado and Texas, driven by uncertainty and fear of the technology's implications. He cautioned that proposals allowing customers to opt out of AI-driven services could force businesses to maintain costly, outdated systems alongside AI-powered ones.

“There [are] a lot of misguided ideas out there, particularly at the state level, that I think could be really harmful,” added Bradley.

[Read more: 6 Ways AI Can Boost Your Small Business]

Encouraging optimism and resilience for small businesses

Despite the challenges 2025 may bring, there are a lot of reasons to be optimistic as a small business. Bradley highlighted small businesses' resilience, innovation, and determination in the face of these obstacles.

"I am amazed by the number of small businesses that are just newly opening or growing,” said Bradley. “I'm in awe of this optimism and this vibrancy that's existing in the small business community.”

Expanding on U.S. Chamber President Suzanne Clark’s remarks at the 2025 State of American Business, Bradley emphasized the essential role of small businesses in the broader business ecosystem and why small and large businesses need each other to thrive.

“We need the innovation, the entrepreneurship, the flexibility that really shines in America's small businesses, but we also need the scale and the ability to reach national and global customer bases that America's large businesses create,” said Bradley. “It's an ecosystem that … we're proud to represent.”

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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