The second Trump administration has kicked off an aggressive and thoroughgoing remodeling of industrial policy, international relations, and the administrative state. Executives who expected some continuity with Biden-era priorities or even a return to 2016-era business-friendly practices are now facing huge volatility, as the administration’s stance on industry-defining issues like tariffs change day by day or seemingly minute by minute. This administration demands agility — but there are three key priorities executives should immediately act upon.
- Move quickly to absorb talent displaced by changes to public funding. Trump’s changes to the Inflation Reduction Act, wholesale cuts to government offices, and aggressive defunding of academic research is creating a once-in-a-generation surge of talent into the job market. Deeply experienced government leaders from programs like the Office of Clean Energy Demonstrations or the Department of Energy’s Loan Program Office, leading academics, and brilliant young researchers are all now looking for jobs, when before, they might have never entered the corporate world. Executives should identify institutions, programs, or research groups aligned to business needs and proactively reach out to displaced talent. Global corporations can especially benefit here, as many visa holders (especially in the academic world) may need to leave the U.S.
- Assess criticality and volatility in supply chains. Tariffs demand an urgent response — but action without consideration is just as risky. Companies need to identify not only where their current business is exposed, but how tariffs and restrictions on critical resources could impact future deployment of early stage technologies. The Lux Criticality Framework, featured in an upcoming inspire report, considers both the total production of key metals and minerals against future demand as well as the national concentration and volatility of their supply chains. Companies can use this mapping to identify their most at-risk elements and turn innovation teams loose on the problem of how to either increase supply or reduce dependency on vulnerable elements.
- Build a corporate structure that allows businesses to serve regional customers. Distributing the R&D function to different regions and business units has long carried risks. It’s often an inefficient strategy, as centralizing the function helps prevent duplicated work and excess spending. These centralized structures make sense when serving a relatively unified global market, but as regions diverge, cracks will begin to show. If the U.S. turns its back on vehicle electrification while China charges ahead (for example), very different R&D efforts will be needed to support U.S. versus Chinese automakers. These diverging priorities make local R&D units, which are closer to prospective customers, more effective. At the same time, trade barriers could make centralized R&D less cost effective — essentially swinging the pendulum back toward a more distributed structure
Lux Take
The Trump administration challenges executives to act quickly and decisively but not to overreact to every tweet or proclamation. If executives can be confident in anything, it’s that we are moving toward an increasingly fractured and polarized global society, with less collaboration between the U.S. and the rest of the world. Leaders should look to the EU, China, India, South Korea, and Japan for policy cues — their reactions to Trump will likely be longer lasting and thus a more useful bellwether of policy outcomes. These countries and blocs could gain in the long term from the U.S.’ turn away from multilateralism, but the initial effect of deglobalization will be economic decline everywhere as supply chains and markets are disrupted.
