Trump Executive Actions and Possible Board Implications

On Jan. 20, 2025, following an inaugural address that emphasized that the United States is a country of “explorers, builders, innovators, entrepreneurs, and pioneers,” President Donald J. Trump signed 40 new executive orders intended to foster these values.

In order of prevalence, the orders covered federal government reforms, foreign trade and relations, immigration, environmental and energy deregulation, and taxes. While each order signed that day and since will have an impact on boards, 10 in particular will affect boards as directors guide strategy, finances, and compliance for the companies they serve.

Strategic Planning: Policies on Immigration, Trade, and Energy

The first executive order signed was Guaranteeing the States Protection Against Invasion. This order, supplemented by Protecting the American People Against Invasion and six others, covers immigration at the southern border, where more than 80 percent of immigration occurs. Of the roughly 49 million foreign-born immigrants in the United States in 2022, half were naturalized citizens; the remainder were either legal or documented immigrants or were illegal or undocumented immigrants, according to Pew Research Center. The US Bureau of Labor Statistics reports that almost 19 percent of the civilian workforce in 2023 was foreign-born and that 48 percent of these workers were from Latin America. Many of these are legal immigrants not at risk of deportation. According to a recent study by the Migration Policy Institute, there were approximately 13 million green card holders in the United States in January 2023. Of the undocumented, foreign-born workers, about 47 percent work in construction, hospitality, or manufacturing , according to data from Moody’s Analytics, as cited by Wilmington Trust. However, as the new executive orders are enforced, the number of immigrants entering the country will decrease and there may be shortages of talent in these and other industries.

Another executive order, the America First Trade Policy, seeks to impose more controls over both exports and imports. The order institutes a new External Revenue Service, which will be empowered to collect tariffs recommended by the secretary of the US Department of Commerce to redress the imbalance of trade. Directors of companies that export or import should study this for strategic implications.

Another executive order of note is Declaring a National Energy Emergency. This directive gives federal agencies the power to “expedite the completion” of all authorized and appropriated infrastructure, energy, environmental, and natural resources projects. This is good news for companies that may have been waiting for regulatory approval. In addition, it could lower the cost of fuel and electricity, thus lowering energy costs for companies. President Trump also signed Unleashing American Energy, which possesses a similar import. 

Financial Oversight: No to Global Minimum Tax, Yes to Price Reductions  

For boards of multinational companies, one of the most important executive orders signed is The Organization for Economic Co-operation and Development (OECD) Global Tax Deal. This order says that the secretary of the US Department of the Treasury and the permanent representative of the United States to the OECD will notify the OECD that any commitments made by the prior administration on behalf of the United States with respect to the global tax deal will have no force or effect within the United States unless Congress passes a law imposing it. The so-called global tax deal refers to the OECD’s proposed global minimum tax. As reported by Protiviti’s Jim DeLoach in the 2024 NACD Governance Outlook report, the OECD coordinated this agreement among more than 130 countries, including all of the Group of 20, to require large companies to pay more taxes in countries where they have customers and less in countries where they are domiciled. The rules aim to ensure a global minimum tax of 15 percent in each country where the multinational organizations operate.

Another order affecting financial oversight will be the directive on Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis. This will take time to materialize, as it essentially removes federal regulations that purportedly forced companies to raise prices due to regulatory costs. If it does fulfill that purpose, it will enable companies to charge lower prices without decreasing profits, a significant shift for company financial planning purposes.

Compliance Oversight: Reduced Red Tape Won’t Lessen Need for Compliance Programs

Under the new administration, there will be no special advancement programs unless they are based on merit, without regard for personal characteristics. This new policy will also apply to any regulations imposed on the corporate sector. Accordingly, the president signed Initial Recissions of Harmful Executive Orders and Actions, which asks departments not to enforce 78 executive orders promulgated under President Joseph R. Biden Jr. Many of these past executive orders made demands with respect to worker health and safety; opportunities for specific ethic groups, such as Black, Hispanic, or Native American populations; and treatment of individuals with varying gender identities and sexual orientations.

Along the same lines, there is a new order imposing a Regulatory Freeze Pending Review. This is complemented by another directive, Establishing and Implementing the President’s “Department of Government Efficiency." In conjunction with the end of the landmark Chevron deference last year, such executive orders will further weaken the ability of government agencies to create new regulations without a clear mandate from Congress.

So, what does this mean for boards? One of the most important roles boards have is to ensure that the companies they serve have an adequate system for reporting risks, including the risk of noncompliance with laws and regulations. While this expectation, known as the Caremark standard, is difficult to enforce, there have been cases where boards have been called to account over it, as reported by the American Bar Association. The general implication of In re Caremark International Inc. Derivative Litigation, as it has recently been interpreted, is that boards need to monitor mission-critical risks.

One such risk is artificial intelligence (AI), which will demand special attention. One of the Biden executive orders rescinded by Trump was the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. In lieu of an immediate regulatory approach, the president is promoting the private sector initiative Stargate, which will invest $500 billion in AI.  

Implications

These 10 executive orders signed by President Trump on his first day in office deserve heightened attention from directors. They will spark changes in business strategies and corporate financial plans, while reinforcing the need for continued monitoring of legal compliance. With thousands of federal laws, rules, and regulations; a network of state laws; and a growing body of foreign laws affecting US companies, there will be no rest for the weary director. Also, the likely decline in enforcement of existing laws and regulations may increase the risk of possibly egregious compliance violations that a future presidential administration may want to pursue aggressively. In the meantime, directors can and will remain true to their own personal values and to their companies’ corporate values in the boardroom.