April 8, 2025
The United States’ announcement that it would be imposing tariffs on all nations will affect all aspects of global trade, most certainly including sustainable business.
There is widespread uncertainty about whether these tariffs are permanent, or rather an effort to force negotiations, or some unpredictable combination of the two. Given this, the impacts on sustainability are in some cases unclear, though some impacts can be predicted with a high degree of certainty. But while the predictability of individual impacts is unclear, the overall impacts are almost certainly a serious impediment to sustainable business.
Should the tariffs remain largely in place, impacts will likely include:
- Job losses in exporting countries where they are badly needed: Economic growth in countries like Vietnam and Cambodia are in large part a result of their increasingly important roles in global supply chains. Should their export industries be hit hard, it will create social and economic dislocations, which will disproportionately hurt women, who have been able to enter the formal work sector through export industries.
- Economic disruptions to materials needed to accelerate clean energy: Global trade, whether in minerals or components for the clean energy economy, will be sharply reduced by these tariffs. Many business leaders are now predicting a recession in the U.S., and a drag on economic activity globally. This would almost certainly raise the price of, and slow down, the energy transition.
- Reduced attention on labor and economic conditions in global supply chains: With global supply chains in turmoil, getting products to market through whatever means necessary could reduce the attention paid to ensuring that labor rights and other human rights are respected.
Even if the tariffs are largely or entirely reversed in short order, there will be lasting damage to the sustainable business agenda because we will see:
- Heightened geopolitical conflict: The tariff policy is resulting in yet more tension in the global system. In addition to the immediate threats and realities of countervailing tariffs from other countries, deepening divisions in the world mean that the global cooperation needed to advance core principles of sustainable business (Trans-Pacific Partnership, anyone?) is on life support. This will be on display at COP30, as well as in other fora.
- Managing volatility and uncertainty crowds out sustainability in the boardroom and C-suite: Simply put, the business agenda is full to bursting right now. Economic uncertainty, flagging consumer sentiment, and the rise of generative AI is straining both the bandwidth, and the budgets, which companies are able to deploy on sustainability. This is clearly short-sighted, and there is zero doubt that the urgency and importance of sustainability will reassert itself. But time, like money, is a finite resource, and for the time being, there are many demands on decision-makers.
- Declining support for rule of law and human rights: The U.S. has been an abiding—if imperfect—voice for rule of law and human rights in global trade. Its voice on these matters is now silent, if not discredited for a generation or more. Taking the world’s largest economy and voice out of this debate is deeply damaging for anyone interested in advancing an economy based on rules. Companies headquartered in the U.S. are also likely to face a loss of credibility on such matters.
These are all the ways that sustainability is challenged by tariffs. But, as Albert Einstein once said, in the middle of difficulty lies opportunity. This blow to the economic system reinforces the importance of resilience, and scenarios as a tool for navigating uncertainty.
The volatile economic impacts of the tariffs should remind all of us that the needs of people must always be central to the sustainable business agenda. Yes, the Trump administration is the proximate cause of this disruptive chapter in the global economy. But it is also important to pause and consider why so many in the public have lost faith in global free trade, creating the environment in which tariffs appeal to many. Large segments of the public long ago abandoned the idea that globalization will make their lives better. They see trade as decimating jobs and communities and heightening their vulnerability—turbocharged by technology—to forces beyond their control.
The business community has an important role to play in demonstrating—with actions, not only with words—that an integrated global economy is the best system for meeting the needs of the average person. Business should not only stand up for global trade, but it should also make sure it works better for more people. This means business support for a modernized and reliable safety net, advocacy for democracy and rule of law, and a plausible vision of employment in an age of AI. Short of that, large segments of the public will support trade barriers that run afoul of the system most companies believe in.
The impacts of tariffs on sustainable business are not easy to predict. The tariffs have introduced even more volatility into an economy facing substantial change. Business may not be able to persuade the American administration to reverse course. But it can take immediate steps to mitigate harms arising and refocus on creating business models, and an economic system, that has opened the door for political support for these tariffs—however misguided—in the first place.
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