Transformation in the era of Trump

Artificial intelligence: President-elect Trump may take a potentially lighter touch toward regulating technology, which could include repealing President Joe Biden’s executive order on AI. ​​It’s unlikely that a strict regulatory framework, such as the European Union’s AI Act, could pass the new Congress or escape a presidential veto.​​ A lighter regulatory touch could mean more self-regulation by technology companies, increased access to capital and greater investment in AI startups​.

For Canadian businesses, this could mean more competition for capital to fund AI innovation. It could also put greater pressure on the Canadian government to align regulations with the United States to enable our businesses to compete. And as the AI race intensifies, it will be even more important for Canadian businesses to raise the stakes on AI strategies that not only address the technology aspects but also the workforce, risk and tax considerations that are key to enabling tangible business value.

Cybersecurity and privacy: While the President-elect may reduce regulations, cybersecurity could be the exception. The incoming administration may consider cybersecurity as a national priority, particularly in regard to critical infrastructure. Based on the Republican platform outline, this may lead to tightened security standards, with a keen eye to avoid overly burdensome regulations on the private sector. From a privacy perspective, the outline references a potential digital bill of rights.

Canada has a similar view of cybersecurity as a matter of national security, as evidenced in proposed Bill C-26, which recently passed its second Senate hearing, and privacy reforms contained in Bill C-27. Canadian companies may find themselves under dual pressure to align to emerging regulations in both Canada and the United States simultaneously. The changing environment elevates cyber resilience as a key priority, which we believe should prompt businesses to look at adopting leading practices versus the minimum standards outlined in current regulatory guidelines.

Supply chain operations: The incoming administration may introduce policies that could affect supply chains, including corporate tax changes, trade agreement renegotiations and the introduction of new tariffs. These changes could make manufacturing in the United States more attractive, potentially leading companies based outside of Canada to considering moving operations south of the border.

The President-elect's return to the White House could also lead to a greater focus on buy-American provisions as part of a broader industrial policy agenda, which could result in further nearshoring or onshoring of operations as thresholds for what constitutes US-made goods rise.

The changing environment means Canadian businesses may have to transform their operations and cost structures by adopting strategic procurement solutions, adjusting supply chain schedules and reassessing their material management strategies.

Workforce: The incoming President may also adopt policies with implications for workforces in both the United States and Canada. Changes to immigration policies, for example, may create upward pressure on US wages and lead to labour shortages.

We also know that financial pressures and fair compensation are already priorities for employees, as evidenced in our 2024 Global Hopes and Fears Survey of employees in Canada and around the world. Rising wage pressures in the United States may prompt similar reactions in Canada, increasing the potential for labour disruption.

These labour pressures come at a time when the new administration’s policies and broader economic pressures will require Canadian businesses to accelerate the reinvention of their businesses. This has further workforce implications, given the need for a future-proof workforce able to support change and transformation. This may require a range of actions, from implementing strong workforce planning processes and targeted skill-building and learning programs to creating compelling talent and reward strategies that improve attraction and retention of key employees.

Corporate structure: With more access to capital investment and greater deregulation on the horizon, vertically integrated companies in regulated industries (such as telecommunications, energy and banking) should rethink how they’re creating value and managing their discrete businesses. One opportunity to increase enterprise value and valuation multiples is to take a hard look at the performance and value of their different businesses and adopt what we call a puretone approach to their corporate structure with a more coherent portfolio and clearer organizing logic.

Stay ahead of evolving risk and regulatory matters: With the potential for new policies and regulatory changes in the United States to affect AI, cybersecurity, supply chain, workforce and other key business considerations, Canadian companies should proactively monitor and prepare for these shifts. Plan and strategize around potential policy changes to understand the implications for your business.

Prioritize agility: A rapidly changing business environment will require Canadian companies to make agility a priority. This could involve further investments in building a workforce with the skills and capabilities to help the business navigate change as well as efforts to strengthen supply chains to reduce risks and transform operations and cost structures while taking advantage of opportunities that emerge.

Embrace continuous change and reinvention: Organizations will need to build greater capacity for reinvention as we enter an era of continuous change and disruption. As they navigate an environment in which the confluence of geopolitical, economic and other key threats is the norm, organizations will need to embrace ongoing transformation and reinvention to turn disruptive events to their advantage.