CEOs need to stop outsourcing politics

THE Israel-Iran war. The Trump tariffs. The Oct 7 attacks. The Russian invasion of Ukraine. The Covid-19 pandemic and the inflation that followed. “Once-in-a-generation events” that could previously be written off as Black Swans are now occurring routinely. Many were caused by government actions, and all resulted in government interventions that are likely to have sweeping economic impacts.

At least since the end of the Cold War, and likely since the end of World War II, few American chief executive officers outside the defence industry have been evaluated on or chosen because of their understanding of politics. Most have delegated their dealings with government and international relations to lobbyists tasked with pushing for lower taxes and deregulation. That’s no longer possible. Just as no competent leader would outsource key decisions about finance, strategy or marketing, a successful CEO now needs to be hands-on when it comes to questions of global government and politics.

Perfect case study

The Trump administration’s tariffs are a perfect case study in how the business world fails to understand the political one. President Donald Trump campaigned on promises to put a minimum 10 per cent tax on all imports and a 60 per cent tax on imports from China. In fact, supporting tariffs may be Trump’s only consistent political position: In 1987 he took out full-page ads in The New York Times demanding high tariffs on imports from Japan. And while Trump didn’t impose wide-ranging tariffs in his first administration, it was clear long before his 2025 inauguration that he would be far less constrained and better able to implement his wishes this time around.