Navigating Trump 2.0

Cleaning up my desktop last week I opened a random document entitled ‘US trip 24’ with various notes, contact names and email addresses and read underneath them: “Why is corporate America not more worried about a Trump presidency?” It was a thought that preoccupied me last year after meeting clients in New York and DC, a potential white paper I’m now kicking myself for not writing and publishing at the time. That’s not to say we could have predicted the timing and severity of the tariffs that were imposed last week, but you can’t say we weren’t warned. The Washington Post’s Jeff Stein wrote in August 2023 (!), ‘Trump vows massive new tariffs if elected, risking global economic war’.  

Between meetings last year, I discussed with US journalist contacts a level of cognitive dissonance I was encountering. Beyond tax cuts and deregulation, little attention was being paid to the possibility that if Trump won the election and made good on his promises to seek retribution against his perceived enemies, reshape the courts and continue his assault on the media, over time an erosion of democratic norms would diminish confidence in doing business in the US.

Turkey might serve as a warning, the lira having declined 95 percent in value since Erdogan was elected president, and dropping sharply again when he locked up his main challenger last month. The FT’s Alphaville blog reported Goldman Sach’s FX team’s analysis of precisely this concern on Friday, which stated, ‘the negative trends in US governance and institutions are eroding the exorbitant privilege long-enjoyed by US assets, and that is weighing on US asset returns and the Dollar, and may continue to do so in the future unless reversed.’

So, it’s only eleven weeks since the inauguration and Trump has already ‘reset global trade’, and ‘ended globalisation’. Put another way, we’re only around five percent of the way through this administration. How do we meet the moment as risk advisors in the face of so much uncertainty?

Since the end of last year we have been working with a client seeking to game out potential implications for their business based on Trump’s cabinet picks and federal agency head nominees. This has included charting the statements and policy positions over time of incoming officials, contrasting them with Trump himself and narrowing down potential or likely outcomes. We have also been evaluating the strength of business lobbying groups, and factored in the closeness of key industry figures to Trump that may sway his opinion. This is one strand of what we call strategic intelligence.

But it's not just the bottom line that businesses need to be worried about. Trump’s retribution agenda has included issuing executive orders banning law firms from federal government business and properties which represented clients who have litigated against him, or even simply hired individuals who may have investigated him previously. Some firms have seen these orders waived by reaching a ‘settlement’ to provide pro bono services.  

Caving to the administration, however, presents a reputational risk of its own. A student group at Georgetown University cancelled a recruitment event by Skadden, Arps, Meagher & Flom last week and, in a letter to its office of attorney recruiting, accused the firm of ‘a lack of moral courage and a capitulation to political coercion that threatens the integrity and independence of the legal profession’. And Skadden alumni sent a letter to its executive partner describing their ‘profound disappointment and deep outrage’ over the deal.

Unlike Skadden, Perkins Coie have challenged the legality of the executive order. An amicus brief, a document allowing parties not directly involved in the lawsuit to express a view relevant to the case, was signed by more than 500 law firms in support of the action; notably the largest law firms in the US, with the exception of Freshfields, declined to sign.

These firms likely consider themselves in a Catch-22 situation, but this can be mitigated by using strategic intelligence to map out likely scenarios and develop action plans accordingly. Trump presents a unique challenge in this operating environment, but companies most likely to weather the storm successfully will not just rely on their own contacts, instinct or prayers, but work with independent intelligence providers with experience at holistically gathering information and analysing it objectively and realistically.

In an attempt to avoid making the same mistake twice, a warning: It may seem a long way off now, but take very seriously the likelihood that there will not be a voluntary or peaceful transfer of power in the US in the next election.

(Pic - Author's own, Trump rally, Minneapolis, October 2019)