Tax policy in flux: How far does the US Administration’s economic influence extend?

KPMG International hosted a virtual roundtable in October 2025 as part of its Global Responsible Tax thought leaders’ group. The group of tax leaders, policymakers, academics, business representatives and civil society discussed how the direction of the US Administration’s economic focus continues to shape global tax policy, and its perhaps unexpected secondary and tertiary knock-on effects.

It explored how these dynamics impact international cooperation, business strategy and the norms of responsible taxation — and how countries and companies are adapting to new uncertainties.

The conversation was held under the Chatham House Rule and included perspectives from multiple regions and sectors. The write-up below summarizes the personal views expressed and does not necessarily represent the position of any particular organization, including KPMG.

Businesses are adapting to instability by standing still — a defensive posture that may stifle investment and reform.

Participants noticed that shifts in US tariff and incentive policies initially created uncertainty, yet many firms ultimately chose not to restructure in response. Frequent reversals in trade positions and the continuity of some tariffs across administrations have created an environment of permanent uncertainty.

Some participants noted that companies, particularly in the UK and Asia-Pacific, are reluctant to re-engineer supply chains or repatriate intellectual property when future rules are unpredictable. Tariffs, it was raised, are now treated as a semi-permanent feature of the global landscape — a “new normal” rather than a temporary political phase.

Multilateralism in tax is faltering, giving way to patchwork arrangements and “coalitions of the willing”.

Several contributors noted a perceived decline in trust within global tax governance, with differing levels of engagement across major economies contributing to a slowdown in progress on Pillars One and Two. In the absence of broad participation, some predicted that consensus could fragment into regional groupings or ad-hoc coalitions.

While some felt smaller groupings could still advance progress, others warned that without universal standards, business certainty and perhaps even fairness will continue to erode.

Civil society voices cautioned that declining cooperation could intensify inequality if nations turn to regressive domestic taxes to fill fiscal gaps.

The line between trade, tax and diplomacy is increasingly blurred.

The discussion highlighted a growing perception that tax measures are increasingly being used within broader geopolitical strategies. Participants pointed to examples of countries adopting reciprocal or defensive tax provisions in response to digital services taxes or other policies viewed as discriminatory.

Recent trade arrangements in parts of Southeast Asia — where commitments on digital services taxes were reportedly linked to tariff concessions — were cited as further illustrations of this trend. Some participants viewed these approaches as effective negotiating tools, while others felt they added to a sense of competitive pressure rather than cooperative rulemaking.

There were also concerns that similar mechanisms could surface in future international disputes, potentially affecting areas well beyond corporate taxation, including sectors such as pharmaceuticals and digital regulation.

Divergent adoption of the global minimum tax risks fragmenting markets and disadvantaging early movers.

Some participants flagged the growing imbalance created by the uneven application of Pillar Two rules. With the EU, UK and Australia advancing implementation, while the US, China and India hold back, some companies may fear losing competitiveness.

Participants saw this as emblematic of a wider “race to resilience” — jurisdictions feel compelled to maintain incentives or subsidies to offset perceived disadvantages.

Fiscal pressure is driving experimentation — and exposing vulnerabilities.

Representatives from developing and emerging economies described how trade realignments and reduced aid are forcing governments to expand domestic revenue bases.

India’s agricultural and textile sectors, for instance, face higher input costs due to tariff changes, while informal and female-dominated workforces bear disproportionate burdens.

Participants also saw positive aspects — incentives to strengthen local production, diversify trade ties with partners such as the UK and Canada, and innovate in tax administration. Yet without capacity-building and predictable frameworks, such shifts risk deepening inequality.

Transparency, cooperation and credible incentives can anchor trust even without global consensus.

There was strong support for reviving the practical agenda of responsible tax — promoting cooperative compliance, tax capacity-building and full-spectrum transparency beyond just corporate income tax.

Participants argued that business has a crucial role to play in demonstrating good practice across jurisdictions — sharing what works with tax authorities, peers and civil society.

Discussion also explored new frontiers for responsible taxation:

• Incentive design — distinguishing “good” from “bad” incentives and aligning them with sustainability goals.
• Internal carbon and water pricing — integrating environmental costs into decision-making.
• Total tax contribution frameworks — encompassing labor, environmental and consumption taxes, not just profit taxes.
• AI and automation taxation — anticipating the fiscal implications of technological disruption.
• Carbon border adjustment mechanisms (CBAM) — assessing their growing influence on trade and investment flows.

Ultimately, participants agreed that “responsible tax” must evolve from principle to practice — proving that trust, transparency and fairness can still advance, even in an era of fractured global governance.

Contributors

• Alessandro Bucchieri, GM Taxation, Enel
• John Connors, Chair of the International Chamber of Commerce's Global Tax Commission
• Ralph Cunningham, Writer and Editor, Sands Street Media Limited
• Bill Dodwell, Editor in Chief, Tax Adviser Magazine
• Femke Groothuis, President, Ex'tax
• Alice Jeffries, Head of Tax Policy, CBI
• Reema Nanavaty, Director, Self-Employed Women's Association (SEWA)
• Susana Ruiz, Global Lead on Tax Justice, Oxfam
• Ed Saltmarsh, Technical Manager for VAT and Customs, ICAEW
• Joseph Stead, Senior Policy Analyst - Tax and Development, OECD
• Tim Sarson, Partner, UK Head of Tax Policy, KPMG in the UK
• Conrad Turley, Head of Global Tax Policy, KPMG International
• Becky Holloway, Programme Director, Jericho
• Neal Lawson, Partner, Jericho