From DEI To Tariffs To Funding: Black Firms Face Quagmire As Trump Economic Plan Reduces Growth Prospects

The business landscape has grown more difficult for Black entrepreneurs, thanks to new economic policy changes.

Black entrepreneur Leo Carr is very worried about the Trump administration’s plans to abolish the U.S. Department of Education (ED). Carr says the move would negatively impact his firm and industry.

A cabinet-level agency, the ED distributes billions of dollars in federal education funding to individuals and programs. That includes financing for Title I funds for low-income schools, special education funding, and Pell Grants for college students, including Black Americans.

“Eliminating the department could disrupt these programs, leaving states and local districts struggling to replace lost funds,” Carry says.

Carr’s example is just one potentially massive setback for ED. Carr owns The Elite Group, a Southfield, Michigan-based educational management and consulting firm. It manages three charter schools and provides educational staffing, teacher training, and janitorial services to school districts.

If ED is shut down, Carr says his firm could lose up to $5 million in funding in the worst-case scenario. He says any loss could lead to the layoff of teachers and other operational staff. “Compounding this problem would be our inability to service as many students as we had previously.” If that happens, Carr asks, where would these students and their families go to receive a basic education? “This creates discourse and confusion in the African American communities we serve.”

All told, Trump’s economic plan has perplexed many Black businesses. They are now dealing with new challenges entailing everything from strained or broken relationships with clients, hesitant payments on contracts, and uneasiness about how to plan future growth strategies.

The predicament has mushroomed since Trump started his second term in January and began imposing executive orders. One command called for dismantling diversity, equity, and inclusion (DEI) programs in the federal government and ordering federal agencies to compile lists of private companies that might be examined for their DEI actions. Black federal workers and those employed by private firms could become jobless.

Concurrently, Trump’s recent erratic tariff policies are producing more uncertainty among business owners, CEOs, and investors. There is a proposed 25% tariffs on goods from Mexico and Canada and an already imposed 10% tariff for China. On March 12, Trump applied tariffs on steel and aluminum from every country, which will likely bring higher prices for U.S. consumers.

The effect of Trump’s tariffs has been catastrophic: Fears of a weaker economy reportedly deleted $4 trillion in stock value as of March 10, after the S&P 500 hit its highest point last month. The proposed onslaught of economic policy changes is also fueling calamity.

Rhonda Vonshay Sharpe, president of the Women’s Institute for Science, Equity, and Race (WISER), said in an email that (DEI) exposes the vulnerability of Black businesses and nonprofit organizations that combat inequality stemming from systemic racism.

Sharpe explained that many Black women entrepreneurs have successfully leveraged the Women-Owned Small Businesses or Economically Disadvantaged Women-Owned Small Businesses certifications to secure essential federal contracts that provide lucrative and stable opportunities.

Now, she added, these federal contracts, which play a pivotal role in enabling Black women to attain financial independence and build wealth, are at risk.

“The loss of income for these businesses will have consequences for their communities and the larger economy,” she said.

Ironically, the anti-DEI backlash overlooks the fact that diversity is critical for any business venture. Sharpe said companies rely on expanding their market share to maintain and increase profits, which requires a diverse customer base.

“An investment portfolio needs to be diversified to mitigate risks,” she explained.

The DEI cuts have left an “undeniable impact” on diversity recruiter Jennifer Tardy, founder and CEO of Jennifer Tardy Consulting, and some of her peers working in the space.

Based in Bowie, Maryland, Tardy’s research and training firm helps workplaces boost diversity and retention. Tardy shared by email that a six-figure business contract has been stalled her client reassesses how to approach this work in today’s political climate.

.Across the board, she noted there’s more hesitation, more scrutiny, and extra steps before organizations make decisions, and those that once moved forward with confidence are now second-guessing their DEI efforts. The new challenge is that DEI has shifted from being a strategic business imperative to a political flashpoint. Instead of acting, she wrote, many companies are spending more time justifying their DEI investments than executing them.

“This hesitation stalls budgets, slows hiring, and creates an environment where the fear of doing something wrong outweighs the urgency of doing what’s effective.”

Tardy added there is a hidden cost of inaction: many organizations assume that pausing or scaling back DEI efforts is a neutral decision, but it’s not.

“Diversity isn’t a trend, and retention isn’t optional,” she said. “Companies that figure out how to move forward strategically—without getting caught in the noise—will be the ones that thrive.”

Black business owner Hosea Haywood is truly concerned about how tariffs being applied by the Trump administration could hurt his business.

He owns Computerized Auto Search in Kansas City. Missouri, which sells pre-owned, late-model vehicles and electric vehicles to consumers and businesses. It’s also a distributor of charging stations for electric vehicles.

Haywood shared tariffs have created unreadiness and uncertainty with retail and corporate vehicle buyers. He says the pullback has occurred in the last month, fueled by worries of massive layoffs of federal government workers and private sector employees reluctant to buy. The retreat has forced him to make some operational changes, including watching more closely how many vehicles he buys for inventory. The firm is now being more prudent and efficient in its vehicle buying decisions for its physical site and online.

“The layoffs and tariffs have put us in a financial quagmire because we’re confronted with a great deal of market uncertainly,’” he says. “We’re cautiously optimistic, but we have to tweak our business until we see what this new trend reveals.”

He is not alone. Take Courtney Snowden, the founder and president of the Blueprint Strategy Group. Based in Washington, D.C., the firm supplies lobbying and government relations services to clients.

During the first Trump administration, Snowden says Democratic-leaning firms and Democrats working in government affairs saw their businesses and jobs evaporate.

“In this second term, we’re witnessing a similar chilling effect on Black government professionals, both in-house and within consulting practices, as a direct result of the relentless attacks on DEI—terms that the right has now weaponized as euphemisms for Black people.”

Snowden added that many Democratic and Black-led firms like her business have seen significant losses since last November, but “I remain hopeful that, just like in the first term, we will eventually see the pendulum swing back toward progress and opportunity for Black-owned businesses in particular.”