Boardroom

The roll-out of President Trump’s tariff regime has ignited an international response, with markets reeling, inflation risks escalating, and projections for a recession increasing. China’s tariff rate has been increased to 145%, while most other countries remain under a 90-day pause on most high tariffs. As the world waits and sees where the trade policy will land, corporate directors are moving swiftly to support their management teams in identifying strategies to reduce their immediate economic losses. To do so, large multinationals with global supply chains are leveraging tariff engineering to modify products or their classification to reduce import duties.

As tensions between D.C. and Beijing escalate, corporate directors are looking to better understand and reduce their exposures to the U.S.-China trade war. As of mid-April 2025, we offer a review of China’s non-tariff countermeasures that target the U.S. With an unclear off-ramp for either side, corporate boards will have to further build scenarios that offer greater supplier optionality in the short-term while also re-evaluating long-term enterprise strategy. Overall, the cost of doing business in and with China will increase for U.S. business and will likely have lasting impact. How can businesses manage through China’s escalating retaliation?

After a week of wild swings in markets and growing demands from investors, President Trump’s trade war may be coming into clearer focus with Wednesday’s (4/9) pause on most reciprocal tariffs for 90 days. With stocks surging on Wednesday, many are hoping that his goal is clearer – China containment. President Trump cited talks with foreign nations in explaining the reversal, but said China would not be included after Beijing announced further retaliations. While the China angle is feasible, we also offer a spectrum of scenarios to help decision-makers play-out risks and opportunities. How will boards assess their risks and re-conceptualize their strategies – supply chain, CapEx, de-valuation, and more?

In the past, political risk has been a specific category of risks that boards and management teams reviewed quarterly and managed through insurance policies. Acute issues were handled by task forces or crisis management teams when needed. Now, under President Trump’s second administration, companies are inundated with constant geopolitical threats and uneven operating conditions. A blurring of political risks is happening in real-time, as political risk is broadening to include: protectionist trade policy, sanctions, tariff retaliation, export/import bans, regional strife and conflict, border security, human rights, international terrorism, failed multilateral cooperation, increasing influence of populist governments, and more. With many of these themes presenting themselves weekly and even daily, how do companies recast their political risk management under Trump 2.0?

Over the past several years, Diversity Equity and Inclusion (DEI) has been a board-level topic, as the corporate push required the Fortune 500 to re-evaluate its talent strategy, employee engagement, and procurement policies. With broad-based opposition to many DEI-related initiatives coming from the White House and litigation threats mounting, DEI is once again in the spotlight. There are no easy answers as corporate boards weigh litigation, reputational, and compliance risks, as well as backlash from employees, customers, and shareholders.

As President Trump ramps up his tariff policies in an effort to protect U.S. industries, key trading partners—including Canada, Mexico, the European Union (EU), and China—have announced retaliatory measures. These responses range from reciprocal tariffs to export restrictions on critical raw materials and industrial goods, posing significant risks to U.S. businesses. Understanding these developments and their implications is crucial for corporate executives navigating supply chain disruptions, pricing volatility, and international trade negotiations.

Headlines have proliferated on corporate rollbacks of promises, goals, and investment in ESG (Environmental, Social, and Governance) and Sustainability—in the U.S. and globally. This can be a range of topics – be it emissions reduction goals, waste reduction goals, and, most dramatically, Diversity Equity & Inclusion (DEI). We are seeing an intensifying pressure on U.S. corporate leaders to limit their legal exposure to concepts that were only recently championed as critical to their success.

In 2024 alone, over 3,000 trade restrictions were implemented globally. This global trend is reflected predominantly in President Trump’s protectionist trade agenda. With their complex international footprint, global companies like Caterpillar, Komatsu, Unilever, Nestlé, BMW, Mercedes, Toyota will either face the impact of tariffs or retaliatory measures. While President Trump’s policies create cost and uncertainty, they also call for adaptation, domestic investment, restructuring, joint ventures, automation, and process innovation. Finally, new climate-related compliance requirements add more complexity to global trade flows with China and Europe.

In February 2025, President Trump reinstated the full 25% tariff on steel imports and increased aluminum tariffs to 25%, eliminating all previous exemptions and alternative agreements. This action expanded the tariffs to include key downstream products and terminated all general approved exclusions. Analysts expect these tariffs to lead to price hikes in vehicles, canned and other consumer products, and construction projects especially. But, if the first round of steel and aluminum tariffs are indicative, U.S. producers generally saw economic gains, job creation, while international companies faced increased costs and market uncertainties. For CPG, Industrial, Automative, and Construction sectors especially, proactive agility and consistent monitoring will be necessary to reduce exposure to global supply chain volatility and increased costs.

With a whole-of-government national security approach, Trump’s America-first policies have intensified competition with China. For good reason, headlines abound on the escalation of trade wars with China – a 10% levy is in effect on goods from China, as well as negotiations with Canada and Mexico -, new tariffs announced on aluminum and steel. What’s falling to the backdrop in his trade policy upheaval, is the neglect of the economic advantages of beating China in renewable tech. Clean energy technology contributed to a record $1.6 trillion to China’s economy in 2023. Consequently, the U.S. and its businesses are losing out on material economic gains.