Insights for boards on executive orders, tariffs, climate regulation, and ESG under the new administration
The uncertainty associated with the Trump administration’s policy initiatives and executive orders, particularly on tariffs and trade, but also on a range of other controversial issues—including immigration, federal grant funding, foreign policy and aid, climate and other environmental and social issues, healthcare, education, the size of the federal workforce, and more—is reshaping the economic, geopolitical, and risk environment. “Indeed, the speed, quantity, and breadth of executive orders and other policy and regulatory changes have been eye-opening, as have the emerging knock-on effects,” noted one speaker during our April 2025 KPMG Board Leadership Conference.
As emphasized during the conference, the level of uncertainty surrounding the administration’s policy agenda is unprecedented and poses a major challenge for boards and management teams. Perhaps not surprisingly, nearly 80 percent of directors surveyed at our conference did not think their management teams had a clear sense of how the new policy agenda will impact their companies.1
The following observations and insights from directors, business leaders, and luminaries attending our annual conference may be helpful as boards calibrate their agendas in the coming months.2
For many companies, perhaps the most significant and immediate challenge is tariff uncertainty—both the direct impact of the tariffs on a company’s supply chain, costs, margins, pricing, and employment, as well as the inflationary effect of US tariffs and any retaliatory tariffs on the US and global economies. As measures of economic uncertainty “surpass those of the pandemic,” as one speaker observed, many consumers, large and small businesses, and investors are pausing spending and investment decisions. Amid concerns about inflation, job security, and compressed margins, betting markets have the risk of recession at 39 percent.3
Global growth is projected at 2.8 percent for 2025, a sharp reduction from the International Monetary Fund’s previous January estimate of 3.3 percent. The same report forecasts US GDP growth for the year at 1.8 percent, down from an earlier forecast of 2.7 percent.4 And economists are forecasting US growth to drop from 2 percent to 1.5 percent by the fourth quarter.5 The Federal Reserve was expected to reduce interest rates three times in 2025, but now the expectation is for one rate decrease, if any at all. “There was postelection exuberance and expectations for deregulation, lower interest rates, M&A, and IPOs, but that is gone,” said a conference speaker. As noted in the Federal Reserve’s Beige Book report, “Business leaders indicated recent strategy discussions shifted away from capital investments aimed at innovation and efficiency toward a focus almost entirely on mitigating tariff-related risks.”6
This uncertainty regarding US tariff policy—and possible retaliatory tariffs—leads to a wide range of tariff scenarios. Some tariff increases appear inevitable; however, the extent and the scope of measures remain unclear, and their impact on companies will vary widely depending on a number of factors, including industry, supply chain design, and geographic footprint. In this environment, scenario planning is essential—from factoring in the effective dates of tariffs and potential cost ranges (best- and worst-case scenarios), to short-, medium-, and long-term actions the company can take to mitigate the impacts (e.g., moving facilities, diversifying suppliers, adjusting prices, renegotiating supplier contracts, or offsetting costs elsewhere in the business).
The implications for the nature and frequency of earnings guidance may also need to be considered.
Despite the Securities and Exchange Commission’s withdrawal of defense of its climate rule, many companies may need to make disclosures under state laws or international disclosure requirements. Companies must also consider whether customers who may be required to report Scope 3 emissions will require climate disclosure from the company, whether some investors will continue to demand disclosure, and whether climate issues are material to the company. As they determine how to proceed, companies will need to balance competing demands on climate.
Notwithstanding the administration’s pushback against company ESG and DEI initiatives, many directors view these initiatives—which must withstand scrutiny, including as a result of recent Supreme Court decisions, executive orders, and other regulatory actions—as fundamental to the business and critical to long-term value creation. “Most management teams and boards weren’t focused on ESG just because it was politically correct. It made good business sense,” said one conference speaker.
The number and scope of the administration’s executive orders reflect aggressive policy shifts beyond tariffs, trade, climate, and ESG—and include immigration enforcement, foreign aid, education, healthcare, and more. These executive orders have generated substantial legal challenges, resulting in injunctions and appeals. While these cases work their way through the legal system, corporations face continued uncertainty about how to proceed in the short term and the long term.
While discussions about the uncertainty associated with the administration’s executive orders and policy initiatives may encompass many elements—strategy, risk management, risk appetite, crisis readiness and resilience, etc.—and vary by company, directors and business leaders attending the conference highlighted the following three key areas of board focus as they help guide their companies through the turbulence:
1 Reflects responses of 121 directors surveyed during the 2025 KPMG Board Leadership Conference, April 2, 2025.
2 Conference conversations were conducted under the Chatham House Rule.
3 Polymarket, as of May 15, 2025.
4 International Monetary Fund, World Economic Outlook, April 22, 2025.
5 KPMG Economics, “Climbing a wall of worry: Navigating uncertainty amidst an erosion of trust,” March 10, 2025.
6 Federal Reserve Bank of Kansas City, “Beige Book” report, April 2025.
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