From the boardroom to the Beltway: How CEOs are navigating policy uncertainty

Welcome to this week's episode of what's at Stake. I'm your host, Brian DeAngelis, a partner here at Penta.

And I'm Ylan Mui, managing Director at Penta. Right now, American businesses are operating in a climate of constant uncertainty. From tariffs to global retaliation, from market swings to shifting tax policy, the challenges feel like they're coming from every direction, but through it all, America's CEOs are still innovating, still investing in our workforce and still advocating for economic growth and competitiveness. Today, we're joined by someone who not only has a front row seat to how the nation's top companies are responding to all of this, but also plays a central role in helping them navigate this moment Ambassador Kristen Silverberg. Kristen is the president and chief operating officer at Business Roundtable, where she helps represent the CEOs of America's largest companies. Previously, she has served as managing director at the Institute of International Finance and as US ambassador to the European Union. She's also held senior roles in the Bush White House and in the State Department. So, kristen, I am so honored to welcome you to what's at Stake.

Hi, Ylan and Bryan, thanks for having me, absolutely.

So let's start with what really has been top of mind for many CEOs lately, and that is the wave of tariffs that have been announced by the Trump administration. Currently we are in that 90-day pause for many of the higher tariff rates, but the levies on China still remain. That blanket 10% tariff on all other countries are already in full swing. So a lot of companies are wondering how do I navigate this moment? What do I do? How are you at BRT helping them through this challenge?

Companies are navigating a lot of uncertainty and Business Roundtable really has two principal roles in helping them through that.

One is that we help our members understand the political environment, the direction of US policy.

It helps them make better business decisions.

And, as importantly, we help policymakers understand the impacts of their decision on business, the way that their decisions are going to impact corporate investment and hiring decisions, the ability of businesses to create great products all of that. Those roles are always really important, but they're especially vital right now because in the context of this trade war, the tariffs are so complicated, the stakes in the tariff debate are so high. So if the administration is able to get some quick deals with some of our trading partners, there's potential to address some longstanding unfair trade practices that work against the US. There's potential for some very big wins for US exporters, a more level playing field for US manufacturing. But if the existing tariffs stay in place, if some of the paused tariffs get implemented or if there's just an extended period of lots of uncertainty around tariffs, that poses some real risk for the US economy. And so our goal at Business Roundtable is to help the administration get to some quick deals quickly with some of our major trading partners and help them bring the tariffs and the threat of tariffs down.

And just picking up on that, we've all heard and sort of read that this can be more than just a temporary trade dispute. This might be a real structural shift in the global economy and of course that'll have implications for American businesses. So what is your view on maybe what those ripple effects could look like, and how are your members preparing for a more protectionist and maybe a more fractured world as kind of the new normal?

Well, I mean, you know this. Penta has been involved in these discussions for a long time, but a lot of structural shifts in the global trading system were taking place long before April 2nd, for example.

We've got a report last year with the Rhodium Group about the moves by many companies to diversify their supply chains away from China. There are lots of reasons for them to do that, but a big part is just more supply chain resilience. They just need more security against supply shocks. Technology is playing a big role in shifting the global trading system. Companies are automating more functions and that means there's less effort to try to chase after low labor costs. It's easier for companies to onshore their facilities, for example.

The weakening of the WTO has been a big factor in changes in the global trading system. So the process that the Trump administration launched on April 2nd is in the context of an already rapidly shifting global trading system. I don't think the outcome of all that has to be isolationism at all, and in fact I think the structural shift that I hope we work for is one where the US resolves some of its trading issues and disputes with our close trading partners, with Europe and Mexico, Canada, India, Japan and then those countries work collectively to address the enormous issues that all of them have with respect to China theft of intellectual property, overinvestment in manufacturing, overcapacity, underconsumption, product dumping all of it.

Right.

We would need to address this in a way that doesn't cause big supply shocks, obviously, but I think one possible positive outcome from this whole process is continued robust trade between us and our closest trading partner on a more level playing field, combined with collective action to address some of the key issues with China.

You actually answered most of my follow up, but I did want to ask you how you know, based on your experience, do you still see that there's a lot of room for trade diplomacy and some bilateral agreements, even beyond? I mean, 90 days is quick, but what can they get done?

It is quick, and one interesting thing about this process is that the Trump administration is asking countries to come to the table on a lot of different issues everything from tariffs, non-tariff barriers, security issues, burden sharing, lots of things and so the good news about that is it gives countries some flexibility to decide what they're going to bring to the table.

A lot to negotiate A lot to negotiate and I understand a lot of that work has already been done. So that's really our objective at Business Roundtable is to really support the administration and our closest trading partners in coming to some of those deals quickly.

Great, I want to pick up on something you mentioned earlier as well. I think that it's encouraging to hear you say that there really is potential for some longstanding, perhaps unfair trade practices to get resolved through this, even as there is a recognition that tariffs and the way they've been rolled out have created some uncertainty and have created some risk for companies. But I like what you said about this being almost a two-way street. Right, You're helping both the companies understand what's happening in Washington, your members, but also helping them understand the impact that some of the policy decisions the administration has rolled out or having on some of your members. Can you share what some of the main messages you might have on that front might be? What are some of the the biggest challenges that you're hearing from your members and from CEOs right now?

Well, you know, as I say, I do think there's some real opportunity in this process, but we don't want to understate the risk either.

There's some real hazards to the economy.

One of the things that's happening right now is that the tariffs against China are so high that it effectively is freezing trade between the US and China, except on some areas that have been carved out from that process and that could have all kinds of ripple effects.

When ships stop arriving at ports, that means longshoremen aren't working. It means that railroads and trucking companies that carry those goods slow down. It means that the shipping companies that deliver those products slow down. It means that the shipping companies that deliver those products slow down. It means manufacturers get fewer inputs, that retailers have fewer products to put on their shelves. Consumers see all that and they start to get really alarmed and retreat and tighten their belts, and so all that really can have some dangerous ripple effects. So part of our job is to say to the administration one we know what you're trying to do and we share a lot of their concerns, particularly around China's unfair trade practices, and let's figure out a way to get deals with some of these trading partners to address the supply stocks and then to focus on some of the core trading imbalances which, as I say, really have a lot to do with China.

Great. I want to switch gears now and talk a little bit not just about potential risks to the economy, but also something that the Business Roundtable has long been a proponent of, which is the potential for some major wins in tax. This year, BRT was a champion of the 2017 Tax Cuts and Jobs Act and making sure that got passed and locking in some important changes in tax policy to make the US more competitive. Right now, that tax bill is up for debate again on Capitol Hill and certainly there are lots of ideas floating around there, but I'm curious to hear what you see as the major stakes for companies in this round of the tax battle.

Well, you're right. That was a big effort for Business Roundtable in 2017, lending support to the Trump administration's effort to reform the business tax code. Prior to the 2017 act, the US corporate tax burden was one of the highest in the OECD, which is the major developed economies. After the reforms, we're sort of in the middle of the OECD, so we're not one of the lowest taxed jurisdictions, but we're not the highest either, and that means that US companies can now compete on a level playing field, and the benefits from those reforms are really extraordinary.

We saw 20% increase in domestic investment. Companies repatriated $2 trillion in capital. It stopped corporate tax inversions when companies incorporate overseas because they need to get a better tax system, and all of that happened while federal revenues from companies hit record highs while federal revenues from companies hit record highs. In other words, the reforms were so pro-growth that actually, the US Treasury brought in more in terms of corporate revenues. So we are working really hard with members of Congress to try to extend some of those provisions. Our biggest priorities is that we want to keep the current corporate rate, which is a big part of creating this level playing field. We want to maintain a competitive international tax system and we want to incentivize innovation and research and development by, among other things, allowing companies to immediately expense their R&D investments.

Let me ask, just sticking with tax for a minute, but I guess, keeping in mind, you have two big challenges in front of you both with tax and tariffs. There's so much pressure around taxation internationally, from OECD reforms to digital taxes.

What does a truly competitive corporate tax system look like in today's kind of evolving global market? Well, I'll give you one example. Market. Well, you know, I'll give you one example.

In the 2017 legislation I mentioned, Congress adopted this global minimum, us global minimum tax, called GILTI G-I-L-T-I. We're familiar, too familiar.

Yeah, so US companies foreign earnings are taxed at least the GILTI rate, and about the same time, as you know, the OECD started this process to require every member to adopt a global minimum tax, but under the deal negotiated by the Biden administration, the US guilty system doesn't qualify under the OECD system, and so this creates a risk that US companies could end up paying substantially more than their counterparts from other countries. The Trump administration has said that the US isn't going to follow these global minimum tax rules, and so that debate is playing out now. But, as I mentioned, the 2017 reforms did a lot to make the tax system the US tax system more competitive, and so we have to work to make sure that that OECD process doesn't undermine that work, and this is playing out in a lot of different areas.

Yeah, you describe the tremendous investment and growth that was born out of the 2017 tax bill, and one thing that struck me about that is when we listen to Chairman Jason Smith, the head of the House Ways and Means Committee, or Speaker Mike Johnson, talk about their perspective of the tax fight right now, you hear them say that over and over again, they want this to be pro-growth, they want this to be good for the economy, and so I just you know, I'm wondering, you know, how important do you think it is for Congress and for Washington to get this done, especially in light of the uncertainty that the terror fight is creating? The latest estimate is that this is going to be done by July 4th. We'll see if that's a birthday present to America. You know, are we taking bets? Well, as I say, these things have a way of sort of slipping past the deadlines that Congress likes to set for themselves. So you know what's the urgency here.

Well, they have made incredible progress actually. I mean we give them lots of credit for tackling this with, you know, seriousness and lots of support from America's leading CEOs, because they'll say this is absolutely essential. There's no room for a corporate tax increase, either a front door corporate tax increase, meaning some change to the rate, or a backdoor corporate tax increase, and there's some discussions about some proposals that would effectively raise the US rate, particularly in the context of a trade dispute and already some risk to the economy. So I think all of our CEOs across the board would say this is absolutely essential and they're lending full support to try to get it done quickly.

Can I switch gears a little bit? So companies, your members especially, are navigating a lot of this global complexity. There's also challenges here at home, particularly when it comes to talent, and I think one of the areas where I've found that Business Roundtable has shown real leadership is workforce development, and you're helping companies, whether it's through apprenticeships or cybersecurity and STEM programs, create new pathways for Americans, especially those maybe without four-year college degrees. So can you talk a little bit about why that's so important to your members and to Business Roundtable?

We have two related imperatives. The first is that we have to make sure that companies can find workers with the right skill sets. When we talk about a tax code or a trading system, that's pro-growth, that can really grow the economy and revitalize the US manufacturing sector. One of the key limitations is will we have workers to fill those jobs? And that's particularly critical. In some of the strategic areas, like semiconductors or pharmaceuticals, we're going to need workers with the right skill sets. But the second thing is that we need an economy that works for everyone, that Americans have to know that if they have the willingness to work hard, to work and to work hard, that they can get ahead. And we think that addressing those two goals is possible. But corporate America has a big responsibility.

We think there are some real opportunities to address those two goals, and so we focused on a few different areas. One important one is making sure that we're bringing a larger number of people into good jobs, and one we're working in particular on the area you focused on, on expanding good jobs to people without four-year degrees. We have about 80 companies who are participating in an initiative called Multiple Pathways, which is where companies work together to try to rewrite their hiring and promotion practices in a way that makes sure that good jobs are available to people without four-year degrees. We have something called the Second Chance Business Coalition, which makes more jobs available to Americans with criminal records. We have an apprenticeship accelerator, which is also focused on people without four-year degrees to give them great on-the-job training. And the bottom line of all that is we really can't afford economically to leave anyone on the sidelines. We need an economy where every person who can work hard and wants to work hard has opportunities to get ahead.

And, if I can just follow up, I mean we've seen so much leadership from the business community on this front. I mean we've seen so much leadership from the business community on this front. Are there not that you don't have enough on your plate, but are there policies or other asks of where the government can help support some of that work?

Yes, we've. We've supported some changes to, for example, short-term Pell because in this rapidly changing economy we can't really think of training as you go in and you get a two-year or four-year degree. It's going to be the kind of thing that you do over the course of your career and sometimes with very short-term training. Our system of supporting education is very focused on the four-year and two-year programs and so we've argued that we need to rethink that. We've supported some changes to the Department of Labor apprenticeship programs to make them more flexible, easier for companies to work with them. So we think there are a lot of opportunities. We have been strongly supportive of WIOA reform, of reform of the federal workforce development programs and we're hoping that we can get some action on that sometime. This Congress Great.

One of the other issues that has become increasingly important for workers and within the workforce is mental health. I know that has also been another important issue that you all have been focused on. May happens to be Mental Health Awareness Month. Can you tell us a little bit about some of the programs and supports you all have been championing with your members?

When we were coming out of COVID, a lot of the CEOs started having this conversation about what they were seeing in their own workplaces in terms of employee mental health. I mean employee mental health. It wasn't a new challenge, but COVID, isolation, COVID stress all the things we all experienced really put that front and center for a lot of companies, and so we started digging in, talking to experts, looking at some of the programs that our companies had, and realized one of the big challenges is that there was limited take up by employees of the company's mental health resources. A big part of that is probably stigma that it's hard to access them, particularly in the workplace. So we took on this project of David Cordani, the CEO of Cigna, who's really a champion on these issues, took on this project of trying to find ways to address stigma, to get more take up, to make sure that employees really are taking full advantages of the resources that their companies are offering, and so they've been working really closely on best practices for doing that.

You have a lot on your plate, from mental health and workforce development to everything we've discussed today right, the tax, fight tariffs. It's a lot of critical priorities for the economy and I'm curious, maybe to close us out as you look ahead and think about kind of your long-term vision, maybe for how associations play such an important role on shaping these national conversations and advancing these policies. What does that look like to you as a leader at the Business Roundtable?

Business Roundtable is an association of about 230 CEOs of large US companies, so about one in four US jobs is tied to a BRT company. They are a big source of economic mobility in America. About a million Americans move into the middle class every year because of employment at a BRT company. They serve as customers to tens of thousands of small businesses. They're a big source of domestic investment, of investment in R&D, and so the issues that impact our companies are closely tied to the issues impacting American workers are closely tied to the issues impacting American workers, families, communities, retirees they're all the same issues. Our goal is really to get policy right in a way that's going to advance a strong US economy for the long term, in a way that supports all Americans, and that's our mission.

Well, I'm going to be respectful of your time because that's a pretty full place. You've got a lot of work ahead of you this year and beyond, but tough issues, so I really appreciate you coming on the show and talking about that.

Thank you, Brian and Elan.

And to all our listeners remember to like and subscribe wherever you listen to your podcasts, and follow us on Twitter or X at PentaGRP, or on LinkedIn at Penta Group. I'm your co-host, Bryan, here at Ylan and, as always, thanks for listening to What's at Stake.