Typically, business and politics come together to solve problems that are too complex for either one to manage alone. That does not mean it’s a good combination. Often they come together as a last resort, such as in major labor disputes. It’s not ideal for anyone.
The current melding of business and politics – the broad implementation of U.S. import tariffs – is not proceeding smoothly because neither the politicians promoting it nor the business people navigating it understand whether it is a political program or a business tactic. Frankly, it’s too much of both.
The politicians who endorse the tariffs hail the program for restoring fairness to global trade, and for securing better terms with various foreign partners, with financial advantages. They project U.S. tariff revenues of $200 billion to $300 billion for 2025.
The politicians that oppose tariffs insist the program will spur inflation and product shortages, and they present objections based on principles too: that the new charges violate existing agreements, and that controlling the cost of materials and products undermines free markets.
Some business people pick up that philosophical objection, the high-finance types mainly. Others simply object that tariffs are inefficient, and make it harder to do business. They note that the new policies put businesses and consumers at risk, but not the politicians imposing the tariffs. This is what many manufacturers mean when they bemoan the “uncertainty” of the current business climate: the tariff regimen offers no precedent from which to strategize. Tariff costs obscure the forecast on details like inflation or supply-chain certainty that could derail their short- and long-term plans.
This point is revealing: Those objecting to the uncertainty of tariffs are not challenging the politics, just the inconvenience. And the cost. The long record shows that business and politics can mix as long as they coordinate their efforts, and share the rewards. Everyone takes credit, or no one is blamed for the results.
For example, the auto industry cooperated with the U.S. government’s Corporate Average Fuel Economy (CAFÉ) standards for decades. Over the past 15 years the industry gamely adopted the policy-driven imperative to transition to battery-electric vehicles. There was no market demand to reconfigure the industrial and energy economies, but the political program was persuasive. Only the markets’ indifference to the rapid shift has changed automakers’ stance.
On this particular point it’s salutary that Ford Motor Co. should invoke its own achievement last month when it introduced a new, $2-billion approach to electric vehicle design and production. “We took inspiration from the Model T – the universal car that changed the world,” according to Doug Field, Ford’s chief EV, digital, and design officer. In short, Ford too responsibility for its own problem.
“We took a radical approach to a very hard challenge: Create affordable vehicles that delight customers in every way that matters – design, innovation, flexibility, space, driving pleasure, and cost of ownership – and do it with American workers,” added Ford CEO Jim Farley.
The genius of this moment is that the problems meant to be solved by tariffs – reinvestment in domestic manufacturing and regional economies, advancement of U.S. design and innovation, a fresh regard for the role of manufacturers and their customers – would be addressed if many more businesses took the Ford approach, resolving a problem organizationally and organically, but not politically.
The tariff program is a political reaction to the decades-long expansion of global trade (itself a political platform in need of ever-expanding regulation), and the discontents that resulted from it. It turns those problems into new problems.
Ford’s new approach to EV design and manufacturing shows great possibility because it assumes responsibility for the problem it aims to solve, and it creates a new route that others may willingly follow.