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With an “America First” philosophy, President Trump will bring structural shifts to U.S. domestic economy and America’s approach to trade, foreign policy, and investment flows. As Trump takes office today, he and his team will push aggressively. Business will feel immediate pressure and have to navigate peripheral clatter . This will be especially true for businesses that are resource- and knowledge-intensive with global operations. Expect greater deregulation, sweeping tax reform, enhanced competition with China, and a reconfiguration of global supply chains due to broad tariffs, levies, duties, and import/export bans. Business leaders will have to ensure readiness to absorb major policy shocks and redirects in Q1 and well beyond.
Key Takeaways:
- Trump and his team have signaled readiness to enact sweeping reforms immediately, expect broad efforts on deregulation and tax reduction
- Boards must oversee enterprise readiness and supply chain agility, especially as high tariffs loom large
- Policy objectives will need to be reframed with the anchoring to national security. Accordingly, the policy debate on energy will evolve from “energy transition” to “energy security”
- Frequent shifts in policy orientation and cabinet and department-wide leadership will also be likely, given the patterns of Trump’s first administration
- As businesses calibrate their global and operational strategies with national security priorities, they can take advantage of the opportunities to increase transparency, sustainability, and human rights considerations
What do America First and MAGA 2.0 mean from a policy agenda?
As his first term demonstrated, expect frequent shifts in Trump’s policies. Our latest analysis indicates the following as a snapshot of his current policy priorities:
1. Budget
- Reduce national budget. Expressed interest in cutting the overall domestic budget, while increasing border and defense spending
2. Taxes
- Broad tax cuts. Cutting corporate and individual taxes and further reducing the corporate tax rate from 21% to 15%
- Individual income taxes. Make the expiring provisions of the Tax Cuts and Job Act (TCJA) permanent
- Individual credits, deductions, exemptions. Intends to bring back the unlimited itemized deduction for state and local taxes (SALT). Offer a tax credit for family caregivers. Eliminate tax on tips, Social Security income or overtime pay
- Congressional Review Act. Many of Biden’s final policies would be vulnerable to rollback under the Congressional Review Act (CRA), a congressional tool to overturn certain federal agency rules within 60 legislative days of the rule being issued by an agency
- Policy removal. “Two for one” rule to be reimposed, where for each new regulation promulgated an agency must remove two existing regulations
- Department and agency rationalization. Defund or eliminate several agencies, including the Department of Education and the Environmental Protection Agency
- Removing workforce protections. By removing certain federal workforce protections, agencies would have more leeway to terminate federal employees at will
- EPA. Defunding or severely restricting the Environmental Protection Agency (EPA). Trump rolled back more than 100 policies carried out by the EPA in his first term
- Environmental efforts. A slowdown and cessation of Biden’s efforts to advance fuel efficiency standards, regulate power plant emissions, and electric vehicle (EV) proliferation
- SEC Climate Rule. Roll-back of the Securities and Exchange Commission (SEC) Climate rule requiring publicly traded companies to report on the climate-related risks of their investments and disclose their emissions
- DEI. With supreme court activity, corporate DEI (diversity, equity, and inclusion) efforts will continue to be scrutinized, although may continue under different business initiatives
- Crypto. Financial services will be another target area for deregulation, which includes the minimal regulation of cryptocurrency and an executive order to create a crypto advisory council
- Energy security. The larger priority will shift from the energy transition to energy security; domestic Liquified Natural Gas (LNG) production will seek protections and expansion
- Break global climate treaty. The U.S. is likely to remove itself again from the Paris Agreement
- Oil & gas. Terminate the leasing of federal lands and waters for offshore wind projects, while favoring oil and gas extraction on federally protected lands
- Nuclear as bi-partisan. Nuclear has become increasingly bipartisan and Trump has indicated intentions of expanding the deployment of small nuclear reactors (SMR) technology
- U.S. global energy leadership. Increase efforts to keep the U.S. as the world’s largest oil and gas producer
- IRA downsizing. Repeal the Inflation Reduction Act (IRA) tax credits while maintaining the Loan Guarantee Program (or ARPA-E) given its success in creating significant investment and jobs in “red” states
- Clawback. Attempts to clawback funding of funds already spent under various programs, including for the installation of electric vehicle charging stations and innovative energy projects
5. Foreign policy
- Hawkish China position. A rare bi-partisan focus, continue strong competition with and oversight of China. This covers trade (tariffs, export/import bans, Most Favored Nation status) and investment policy, military competition, and technology
- Ukraine and Russia. Alter the position towards supporting Ukraine by ceasing military and financial support to Ukraine and urge the nation to make a deal with Russia (although Congress is not unified in a strategy for Ukraine)
- Israel and Gaza. Trump has promised to get the conflict “settled and fast,” with a cease-fire in place, Trump will have to look to maintain the agreement and find other levers to stabilize the region
- Syria. With a Gaza cease-fire in place, Syria poses an opportunity for the U.S. to support its rebuilding and build an alliance with the new administration to bring stability to the region
- Saudia Arabia. Continue his focus on Saudi as a bulwark against Iranian influence in the Middle East and deepen economic and military ties with Saudi
- Tariffs. Trump has proposed a 10% tariff on all U.S. imports and up to a 60% tariff on Chinese products, both of which would violate U.S. treaty commitments. He has also promised a 20% tariff on imports from Canada and Mexico
- Outbound investment. Restrict and monitor investments that are considered a risk to national security, which focuses on China’s sectors for semiconductors, supercomputers, quantum computing, and AI
6. Transportation
- Auto. Reverse the light-duty emissions standard, which Trump refers to an electric vehicle (EV) mandate
- Tariffs on auto imports. Support significant tariffs on cars made overseas
- Autonomous transportation. Advance pro-autonomy policies, which could eliminate commercial motor vehicle jobs
- Rail. Reduce spending on high-speed rail projects and roll back safety regulation
7. Healthcare
- Affordable Care Act. Interest in replacing the ACA without offering specifics on a replacement plan
- Reproductive health. Mixed information on further restrictions on women’s reproductive health and implementation of nationwide abortion bans
- Prescription drug costs. Supports lowering prescription drug costs
8. Defense spending
- Budgetary growth. Overall expectation is to increase the national defense budget to bolster American military capabilities to counter perceived threats from China
- Modernization. Priority to modernize the military and expand funding for advanced technologies – AI, cyber defense, hypersonic weapons
- Operational readiness. Streamline spending in the Department of Defense (DOD) to redirect resources toward operational readiness and new combat capabilities
- Cost-sharing with allies. Negotiate cost-sharing arrangements with allies to reduce the U.S. financial burden in joint defense endeavors
- Isolationism. Promote a more self-sufficient approach to U.S. defense strategy and reduce integration with military alliances
9. Technology and innovation.
- AI boom. With Elon Musk in a central position along with other leading technologists, expect to see a massive buildout of data centers, electrical infrastructure, and whatever Big Tech needs to fast-track the AI boom
10. Immigration
- Boarder security. Trump has promised to crack down on migration and enact the largest deportation in U.S. history, which would destabilize countless communities and families as well as the domestic economy
- Legal entry. Reduce the number of legal refugees permitted access to the U.S. in coming years
- DACA. Push to end the Deferred Action for Childhood Arrivals (DACA), a program that shields children brought into the country
- Birthright citizenship. Look to end automatic citizenship for children born in the U.S. to immigrants living in the country illegally
- Ending of “Parole.” Push to end the “parole” program, which allows migrants with U.S. sponsors to legally enter the U.S. and obtain work permits
Actions business leaders can take:
- Assess domestic and global supply chain risks. Evaluate exposure to imports, from China, Canada, and Mexico, and explore diversifying suppliers or relocating production to tariff-exempt regions (e.g., Mexico and Canada under USMCA). Adopting a “China+1” strategy should be a top priority
- Engage in pre-competitive advocacy. Work with industry groups and trade associations to advocate for policy changes or exclusions for critical materials that may be disproportionately impacted by tariffs and other policy cornerstones
- Avoid overcorrecting. With such dynamic policy shifts, encourage management teams to extend their due diligence on impacts to the business, employees, and communities before making material shifts in strategy
- Monitor pricing strategies. Assess the ability to pass on increased costs to customers without sacrificing market share. Price elasticity will be a key factor in maintaining competitiveness under a pro-tariff administration
- Optimize operations and agility. Invest in lean processes, automation, and other operational efficiencies to absorb rising material costs and reduce dependency on tariff-affected products
- Ensure supply chain traceability. Use technology to ensure compliance with evolving trade laws and to track materials through the supply chain, minimizing risks associated with forced labor or other compliance issues
- Develop geopolitical scenarios. Incorporate trade war risks and potential tariff escalations into enterprise risk management frameworks, ensuring boards are prepared for volatile international trade dynamics
- Strengthen resilience. Explore nearshoring and dual-sourcing strategies to mitigate geopolitical risks and create more resilient supply chains that can withstand disruptions
- Evaluate U.S. investments. Whether an industrial company or not, identify opportunities to expand U.S.-based operations to take advantage of government incentives for reshoring critical industries
- Leverage government incentives. Actively engage with government agencies to secure subsidies or tax breaks aimed at reshoring manufacturing and bolstering domestic production capabilities
- Invest in workforce development and monitor immigration policy. Focus on upskilling the workforce to adopt new technologies, including those aligned with sustainability goals, ensuring long-term competitiveness. For companies that employ low-skilled workers, the immigration policy may limit access and support to low-skilled employees
Additional Telesto resources:
- Takeaways for management teams – Apple’s playbook on how to beat China tariffs and export restrictions
- China’s intensifying response to Trump 2.0 tariffs and what it means for U.S. companies
- Trump 2.0 tariffs and preparedness for Industrial companies
- Navigating corporate climate action under a second Trump administration – 7 focal points for business leaders
- Faros, our climate risk assessment tool, helps your organization identify emerging climate threats as they become more common and disruptive and position your assets to protect operational continuity, hedge against rising insurance costs, meet regulatory disclosure requirements, and incorporate climate risk into asset acquisition and disposal.
- Prism, our ESG benchmarking tool, helps your organization to rapidly strengthen its sustainability, climate, and ESG performance and disclosures through in-depth benchmarking of industry peers and identification of gaps and areas of distinction