Businesses today face a political and economic climate marked by uncertainty, requiring proactive strategies to navigate emerging challenges. In the inaugural session of the ICR Conference Spotlight Series, Bruce Mehlman, a seasoned political strategist with experience in the George W. Bush administration, shared key insights on how companies can prepare for policy shifts, regulatory changes, and market disruptions.
Throughout the discussion, Mehlman highlighted three key principles for businesses to navigate the evolving landscape effectively: preparation, adaptability, and long-term strategy.
“Boards, companies, and leaders within organizations need to prepare more and better,” he stated. “We are in an era of unpredictability, but a lot of the unpredictability is predictable. If you deepen your risk assessment, contingency planning, and internal cross-coordination, you can be better ready for what’s coming.”
He further cautioned businesses against assuming that political and social upheaval would pass quickly. “If your theory is that we’re in this kind of fever dream and that populism, nationalism, and culture wars caused by the internet are going to go away and it’s going to be back to the world we all lived in, you’re wrong,” he said. “We need to evolve what we say, how we say it, where we invest and operate, and how we advocate.”
Finally, Mehlman highlighted enduring business principles. “There are plenty of things that were, are, and will forever be true. We need to play the long game in business.” Regarding political advocacy, he stressed bipartisanship: “Stay bipartisan. There is never a party that takes over and stays in control. It goes back and forth. You need friends on both sides.”
With these principles in mind, Mehlman provided insights into how businesses should brace for upcoming challenges in trade, taxation, regulation, and workforce policies.
A More Experienced Trump Administration
Unlike in 2017, the current administration is more prepared, with a clear, legacy-driven agenda. Businesses must brace for aggressive policy actions, particularly in areas such as trade, immigration, taxation, and regulatory reforms. Given the administration’s track record, key focus areas include:
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Tariffs and Trade Wars: The administration has imposed a 20% tariff on all Chinese imports, escalating trade tensions between the two nations. In retaliation, China implemented a 15% levy on key American agricultural products, including chicken, pork, soybeans, and beef. These measures have raised concerns about disruptions in global supply chains and increased manufacturing costs. Additionally, Canada and European trade partners could face new negotiations regarding tariff impositions.
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Budget and Spending Cuts: The administration has proposed deep spending cuts to federal programs, with discretionary spending reductions in education, healthcare, and environmental initiatives. Budget negotiations with Congress will be a key determinant of how these cuts unfold.
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Tax Reform and Expiring Cuts: The Trump-era tax cuts of 2017 are set to expire at the end of 2025. The administration has signaled a push to extend these cuts, with added incentives for businesses; however, economic analysts suggest that tax policy changes could face significant resistance in Congress, given concerns over the national deficit.
- Immigration: “The President campaigned on the need for large-scale deportations of undocumented individuals,” Mehlman said, noting that those deportations could widespread impact. With more than 40% of agricultural labor comprised of undocumented workers, the farming industry could experience labor shortages and rising costs.
The Regulatory Landscape: What Businesses Should Expect
- Diversity, Equity, and Inclusion (DEI) and Environmental, Social, and Governance (ESG) Policies
Regulatory rollbacks targeting DEI and ESG initiatives are a priority for the administration. “I don’t know any business that thinks diversity or inclusion is bad,” Mehlman asserts. He advises businesses to continue internal diversity efforts but to avoid high-profile branding around these topics to prevent political backlash. “There’s a difference between making them priorities and beating your chest and talking about how committed you are to them,” he says. “If you do the latter, they’re going to come after you. They’re going to pick a fight with you.” - Energy and Climate Policy
The administration is prioritizing fossil fuel expansion while scrutinizing green energy incentives. The government’s focus on “energy dominance” suggests increased investment in domestic oil and gas production. Meanwhile, tax credits for renewable energy projects, including solar and wind initiatives, could face cuts or restructuring.
Market and Political Resistance
Despite the administration’s aggressive policy approach, resistance from state governments, the judiciary, and financial markets is expected.
“Right now, it feels like it’s only the White House driving everything around the world,” Mehlman observed. “That won’t persist. You need to focus on Congress as well, and not only the U.S. but global, and avoid overreacting.”
Democratic-led states, in particular, are likely to introduce counter-legislation or legal challenges against federal policies. Meanwhile, financial markets may react negatively to abrupt policy shifts, particularly in trade and tax policy.
Strategic Recommendations for Businesses
To navigate the current regulatory and economic environment, Mehlman suggests that businesses should adopt the following strategies:
- Maintain a Bipartisan Approach: Mehlman reminds leaders that political power frequently shifts, so maintaining relationships across party lines can ensure long-term stability. “Stay bipartisan; play the long game,” he says. “All administrations come and go. All Congresses come and go. It’s going to change.”
- Strengthen Supply Chains: With trade tensions on the rise, Mehlman recommends diversifying suppliers and assessing tariff exposure. “If your supply chain is 100% all China, you know you’ve got a problem,” he says, “but it could be other places where you have challenges, too.”
- Monitor Workforce Policies: The administration’s immigration and labor policies could impact hiring practices, particularly in industries dependent on foreign labor. However, companies don’t have to stop considering diversity and inclusion. “I think everyone recognizes if you want to get and maintain and continue to attract and retain top talent, you want a more diverse organization and inclusive organization,” he says. Going forward, he says, it should be more about incorporating it into your corporate culture rather than broadly messaging those initiatives to the public.
- Engage Proactively in Washington: As stakeholders increasingly expect businesses to be vocal and engaged in policy and legislation, Mehlman advises CEOs and executives to develop a clear strategy for government relations. But keep in mind: “Just because [a CEO] knows how to run a business doesn’t mean [he’s] good at government relations or good in a meeting with the government stakeholder,” he says. Carefully evaluate your strategic approach and engage outside consultants if necessary.
- Adapt Public Messaging: “Be careful about what you say publicly,” warns Mehlman. Businesses should be cautious in making politically sensitive statements, ensuring their messaging aligns with both business objectives and stakeholder expectations.
Embracing Adaptability in Uncertain Times
In an era of political and economic uncertainty, strategic planning and adaptability are critical. While policy shifts may create disruptions, businesses that proactively engage in risk management and government relations will be best positioned for long-term success. For more in-depth insight, listen to the full recording of the ICR Conference Spotlight Series featuring Bruce Mehlman.
