With President Trump securing a second term, our specialists provide a high-level overview of the anticipated changes in trade policies and tariffs, onshoring and nearshoring, and the ESG landscape.
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ESG
ESG initiatives in the U.S. could face significant shifts as a result of a second Trump presidency. At the federal level, specific regulations, such as the Security Exchange Commission’s climate disclosure rule, could experience a rollback or curtailment and potentially alter the trajectory of national environmental policies. However, a shift in federal stance might not deter states like California, Illinois, and New York from continuing to take steps to implement their own climate rules – and more states might follow suit with their own initiatives. This decentralized, state-driven approach could present a complex regulatory environment for companies, posing greater challenges than a unified federal mandate.
The Uyghur Forced Labor Prevention Act (UFLPA), which aims to prevent goods produced using forced labor in China’s Xinjiang Uyghur Autonomous Region from entering the U.S. market, continues to have strong bipartisan support. The Department of Homeland Security added 29 additional companies to the entity list in November 2024. Coupled with potential tariff increases, companies should expect to continue to see challenges with sourcing from China.
Additionally, the European Union (EU) continues to expand its stringent ESG requirements. U.S. companies aiming to access the EU market will need to navigate these intricate regulations. This evolving global and domestic landscape underscores the necessity for businesses to continue to invest in robust ESG programs to remain competitive and compliant.
Tariffs
Businesses should anticipate significant alterations in U.S. tariff policies and should be ready for possible swift implementation of tariff modifications when the Trump administration takes office. Businesses also should be ready for how tariff policy changes could drive a shift toward nearshoring and offshoring and what that shift might mean for the manufacturing landscape. Being proactive and prepared for changes in tariffs will be crucial for businesses navigating postelection trade policy expectations. Read this article for more information on what tariff policy changes businesses should expect and to help determine what duty minimization opportunities they might want to start implementing sooner rather than later.
Onshoring and nearshoring
Many companies are proactively evaluating their supply chain risks in response to anticipated changes in U.S. tariff policies under Trump’s administration. As a best practice, companies should conduct comprehensive risk assessments to identify vulnerabilities, particularly concerning suppliers in countries targeted by potential tariffs such as China and Mexico. This assessment involves analyzing the financial health and stability of suppliers to gauge their capacity to absorb increased costs without compromising operations.
In addition to supplier assessments, companies should explore strategic adjustments to their supply chains to mitigate tariff-related risks. This review includes assessing nearshoring or reshoring production to bring manufacturing closer to end markets, minimizing exposure to international trade disruptions. Some companies might benefit from diversifying sourcing options by engaging suppliers from multiple countries to reduce dependence on any single region, thereby enhancing resilience against trade policy shifts.
Looking ahead
As the new administration builds and enacts its policies and engages with U.S. trade partners, many businesses are trying to understand their potential exposure by taking inventory of which purchases could be affected by changes to ESG and tariff policies. Businesses need to determine the potential financial impact and what alternatives are available to mitigate the impact of coming changes or to pass the cost along to the end consumers.
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