Foreign Policy Priorities for the Next President: A Business Perspective

On December 6, 2024, the Council on Foreign Relations hosted business leaders who are members of the Council’s CEO Leadership Circle for a one-hour virtual roundtable on the Foreign Policy Priorities for the Next President: A Business Perspective. The objective of the roundtable, which included 25 business leaders from across various sectors, was to seek the insights from CFR’s leading CEOs on the most important geoeconomic and geopolitical challenges facing the nation and to seek their advice on potential solutions. The session was not for attribution. Below is a summary of the views expressed.  

Overview: 

Overall, there was general agreement that the U.S. economy is strong, and business leaders are optimistic to varying degrees, about the outlook for the next 12 to 18 months. This optimism reflects expectations for continued growth averaging 3%, low unemployment, declining interest rates, and subdued energy costs. Advancing technologies, including AI, are also impacting growth and competitiveness. Anticipation of deregulation and a shift in antitrust policy are also contributing to this sense of optimism.  

That said, a widely shared concern about the U.S. and global economies is uncertainty and the need for clarity on important policies including tariffs and immigration, which may increase inflationary pressures. More clarity is also needed on the direction and scope of deregulation and antitrust policy. Also of concern is the need to rectify the broken U.S. fiscal process, which is adversely impacting growth, our competitive edge, and the ability to timely resource our national security priorities. Discussions about the independence of the Federal Reserve can also adversely affect confidence at this critical juncture.  

Regarding the geopolitical transformations underway, there was also optimism, particularly with regards to the prospects for diplomatic solutions to the wars in Ukraine and the Middle East and possibly even to the tensions with China. There was also significant agreement on the need for U.S. leadership and the importance of upgrading, modernizing, and reforming our defense industrial base and procurement system to meet the challenges of the transforming global landscape. 

Among the chief geopolitical concerns are, first and foremost, the relationship with China and its potential responses to threats and implementation of tariffs. Several other concerns include the deepening authoritarian alliance among China, Russia, Iran, and North Korea, the increase of gray zone tactics (i.e., cyber and disruption of undersea internet cables) by Russia, China, and other U.S. adversaries, the political and economic challenges facing our European allies, the anticipated demands of the technology advancements for energy capacity, and the need to stay competitive in the global energy transition.  

Recommendations 

The discussion included a variety of specific recommended pathways, summarized below, to meet these challenges.  

On the economy:  

• Tariffs: In the complex global landscape in which companies are operating, potential tariff policies are a principal concern because the imposition of tariffs and the potential consequent retaliation may disrupt the markets, increase inflationary pressures, and impact business operations, making U.S. companies less competitive globally. The major concern regarding China’s response to tariffs is that, given the trade imbalance, it may not be a tariff-for-tariff response, but a more broad-based form of retaliation, for example, limiting critical minerals essential for an advanced technology economy, or harassing and constraining U.S. companies’ operation in China. While it can be argued that tariffs may result in increased investment in the U.S., clarity about tariff policy was emphasized as an important requirement for business planning. In developing that policy, thoughtful consideration by the new U.S. administration is needed regarding the impact of potential tariffs, including their secondary and tertiary effects, on inflation and reducing growth.  

• Immigration: One area of the economy that may be more fragile than it appears is the labor market and the negative impact of demographic trends on a sustainable labor force. Given the important role immigration has played in U.S. economic performance, a thoughtful approach to the impact of potential immigration policies on the labor force is important. The election focus on the issue may provide an opportunity to put together a comprehensive immigration regime that addresses legal immigration that meets our economic needs, while also addressing illegal immigrants and strong border security. 

• Advanced Technology: The U.S. stands at an extraordinary point to take advantage of its leading role in advanced technology innovation, particularly AI, to upgrade the nation’s economic infrastructure, leverage the outsized potential for societal improvements, and ensure the U.S. continues to be at the front end of the digital transformation. Among the keys to this success is promoting investment and advanced energy policies in the areas of solar and nuclear where China is investing heavily. Incentivizing responsible AI and making sure AI does not fracture the labor markets into the haves and have-nots are important guiding principles. A balanced export control policy is required to ensure countries continue to work with the U.S. versus China, and the U.S. should also counter AI overregulation by foreign governments. Promoting American AI is important for U.S. leadership of the global digital infrastructure. Furthermore, digital trade policy, building on the successful elements of the USMCA and the U.S.-Japan digital trade agreement, can help foster the United States’ competitive edge and broaden access to global consumers. Cybersecurity, particularly for U.S. critical infrastructure, and harmonizing standards across borders, needs to be a priority. In the financial sector, the administration’s focus on digital currencies should include assessing and developing U.S. policies on stable coins.  

• Regulation: There is general agreement that current regulation is excessive and that deregulation will be positive for economic growth. But the Supreme Court rulings overturning a 40-year precedent that courts should defer to agency interpretations of statutes, combined with a commitment of the new administration to deregulation, have led to a significant lack of clarity for the private sector. In order to provide an overarching and sustainable approach to regulation, one recommendation from the discussion is to establish a cost/benefit framework for all regulation, which would be developed by the Office of Management and Budget. OMB would then establish a set of standards that agencies should abide by.  

• Fiscal Policy: The U.S. is facing a very dangerous long-term trajectory with the accumulation of excessive national debt that threatens the stability of the U.S. and global economies. While recognizing the new administration’s commitment to extend the 2017 tax cuts, one of the recommendations discussed was to not add any additional tax cuts. The breakdown of the Congressional budget process must also be addressed as a top priority. Among other consequences, the delay in approval of budgets and the consequent use of continuing resolutions negatively impacts the ability to timely fund U.S. national security priorities.  

• Energy Policy: The U.S. is the number one energy producer in the world and the new administration is committed to increasing production and decreasing regulation. While fossil fuels will remain an important part of the energy mix going forward, many U.S. industries have embarked on significant commitments to decarbonize. The Inflation Reduction Act (IRA) has played an important role in spurring investment with a number of companies having started investments aimed at accessing the grant or tax incentives included in the law. Maintaining the IRA is an important part of continuing sustainable, predictable investment in the energy sector and ensuring the U.S. is competitive with China, particularly in electric vehicles, solar, and nuclear. The demand for electricity to support an advanced technology economy is going to increase significantly, which is expected to increase the demand for LNG. This will also have a significant impact on our requirements for minerals, which again ties back to concerns about a broadening trade war.  

On geopolitical challenges:  

• Complex Threat Environment: The authoritarian alliance of China, Russia, North Korea, and Iran threatens to weaken U.S. leadership, change the international order to their advantage, and drive splits among Western alliances, whether it is transatlantic or the alliances we have developed in Asia. How the Ukraine war is resolved will have broader implications for the international order. To address this complex threat environment, the new administration and businesses must approach the challenges posed by these countries in a comprehensive manner. This complex threat environment also underscores the importance of the U.S. remaining engaged and committed to lead with peace through strength.  

• National Security/Defense Industrial Base: Urgent systemic change is needed by the government and the defense industry to bring national security into the 21st century, as geopolitical threats rise, technology rapidly advances, and budget resources become more constrained. Accelerating the integration of digital technology and bringing new companies into national defense, especially AI companies, is critical. The acquisition process needs to be reformed to enable speed and agility to handle disruptions. Our allies need to be encouraged to resource their national security interests, but the U.S. also needs export controls that allow our allies to have access to technologies that support their industrial base. Consideration should also include leveraging U.S. capital markets to fund and securitize defense needs, contracts, and infrastructure, as well as placing production and sustainment operations for U.S. military forces around the world. 

• Europe: A stable and prosperous Europe is in the U.S. national security interests, and it is imperative that the new administration define a comprehensive U.S. policy towards Europe in economic and security terms. Europe is facing a number of critical issues, including Russia’s challenge to its integrity and sovereignty, an energy crisis, competitiveness problems, and leadership crises in two of its largest countries, France and Germany. Ukraine is a part of the challenge to Europe and while there is optimism that the conflict may be resolved, there is also recognition of the difficulty of engaging Russia in a viable solution.  

• Asia: A top priority for the new administration in dealing with the challenges of competition with China is to continue to have a very strong bilateral relationship with India. Continued attention to working with the largest democracy to bolster a free and open Indo-Pacific is important to the U.S. and global economy and security.  

• The Middle East: Along with the optimism that the Middle East conflict may be resolved, the continuation of the Abraham Accords was highlighted as important for the region. In the Gulf, expectations included a tough stance by the U.S. on Iran, a clear political process regarding a Palestinian state, as well as a robust U.S. security presence in the region.  

The CEO roundtable concluded with a recognition of the importance of business leadership engagement with the new administration on the major global political and economic challenges facing the United States with the goal to find common solutions that promote peace and prosperity during this era of major global transformation.