Trump's tariff policies + the Global Great Lakes

As geopolitical and economic dynamics shift under Trump 2.0, business and civic leaders must recognize the potential negative and burdensome impacts on interconnected regional economies. The Global Great Lakes presents a compelling case study of these challenges.

When analyzing potential tariff impacts on this unique cross-border economic ecosystem, there are five critical issues to grasp:

1. Regional integration at risk: The Global Great Lakes is an integrated system where manufacturing, hospitality, technology, finance, and trade form a delicate balance across international boundaries. Once a strength, this interdependence becomes a vulnerability when trade barriers rise.

2. Competitive cost disruption: In manufacturing alone, Trump's tariffs will increase raw material costs throughout the supply chain, putting pressure on margins for businesses of all sizes and accelerating inflation within the region.

3. Tit-for-tat spiral: Trade partners rarely absorb tariffs passively as they cannot ignore their economic sovereignty. The likelihood of countermeasures creates a cascade effect that will amplify economic downsides beyond initial projections.

4. False protection paradox: While tariffs are good politics and a winning issue on the campaign trail, aiming to protect domestic industries and allow national governments to pick the winners and losers of an economy, tariffs are bad economics and create unintended consequences. The resulting friction in business operations and increased consumer costs will outweigh protective benefits and impact the long-term vitality of the Global Great Lakes.

5. Economic growth stifled: The cumulative effect of Trump's tariffs threatens to constrain growth, limit job creation, increase economic uncertainty, and reduce financial security for residents and businesses throughout the Global Great Lakes.

The region's business and civic leaders must confront Trump's tariffs head-on and convey to Washington that these policy shifts will create long-term challenges for the Global Great Lakes.

It is imperative to communicate and engage with political leaders across the aisle and let them know that Trump's economic policies and pro-tariff agenda will have significant negative impacts on the Global Great Lakes region.

Enjoy the ride + plan accordingly.

-Marc

The new economic playbook: What every global leader needs to know

Vladimir Lenin is credited with the phrase " commanding heights, " which he used in a 1922 speech to describe the strategic parts of the Russian economy over which his still-young revolution was determined to maintain control.

Since this speech, free-market champions and those seeking more government engagement to ensure prosperity and stability have waged a battle of ideas to control the "commanding heights" of the economy. This debate on the balance of power between government regulators and free-market capitalists has significantly affected American politics, economics, elections, and culture.

The 2008 global financial crisis resulted from an economic model of lightly regulated financial capitalism. Yet despite widespread anger at Wall Street bailouts and unease about the American economy, there was no great upsurge of left-wing American populism in response—the response was from the right, so powerful that it helped elect Donald Trump as president twice.

I taught a Globalization and American Politics course as an adjunct professor at George Washington University. My task was to explain to the next generation of leaders what the "commanding heights" were and where they were going.

In my decades of advising global leaders, I have rarely seen such consequential economic policy shifts as those we are witnessing today. Trump 2.0 is taking a run at a new version of the " commanding heights" and seeks to crush decades of how the US government has operated and paid its bills.

The new Trump administration's pivot to tariffs as a primary revenue mechanism for funding $4.5 trillion in tax cuts represents nothing less than a fundamental reimagining of America's economic framework.

As I see it, here are the five critical developments of a reimagined American economic framework:

First, this tariff-funded tax strategy signals a decisive break from decades of free trade orthodoxy. This new American tax strategy isn't simply a policy adjustment for multinational operations—it's a paradigm shift requiring complete supply chain recalibration.

Second, Wall Street's serious discussions of a "Mar-a-Lago Accord" to restructure Treasury holdings show how financial market traders are prepping for new sovereign debt innovations outside traditional frameworks. This new trading reality could rewrite risk assessment models across your investment portfolios.

Third, the intersection of aggressive trade policies and debt restructuring talks creates vulnerability in traditional safe-haven assets - and do not ignore crypto. Your financial operations will need new hedging strategies.

Fourth, this environment favors domestic production and reshoring in unprecedented ways. Companies with nimble manufacturing footprints will outperform competitors who are still wedded to globalized supply models. It is no surprise that following a meeting between Tim Cook and Trump last week, amid the threat from Trump's tariff plans, Apple announced the company would add 20,000 US jobs and committed $500 billion to the US market over the next four years.

Finally, these shifts will accelerate the creation of five major trading zones along geopolitical lines—the United States, China, India, Europe, and Africa. For executives, trading and market access diversification must now account for emerging economic blocs, especially the Global South.

The global leaders who thrive in this new economic framework will recognize that we are not experiencing temporary volatility but rather a structural transformation of the global economic order. This demands more than reactive adjustments—it requires proactively creating new business models based on these new geopolitical realities.

Enjoy the ride + plan accordingly.

-Marc

Is it better to innovate, create, or aggregate?

+ Business models, LVMH, and Bernard Arnault

A cuckoo bird is an odd inspiration for business success.

I mean, they're also shameless parasites - who wants to be a part of that?

Many species of cuckoos are known to leave their eggs in other birds' nests. Their success depends on letting entirely different species raise their young.

Ornithologists used to think that cuckoos simply wait for the right moment to lay their eggs in other birds' nests, but they have more moxie than that.

In a study published in the journal Ethology, researchers from the University of Granada found that the Great Spotted Cuckoo laid its eggs in magpies' nests while the magpies sat on them. These researchers thought that magpies had gotten sick of raising these ungrateful cuckoos and started sitting on their nests almost constantly while the cuckoos were incubating their eggs.

In Darwin-esque brinkmanship, the cuckoo called the magpie's bluff and went for the crazy (cuckoo, if you will) option, laying eggs in another bird's nest while the bird was still sitting there.

Even when magpies retaliated with aggressive pecking, the cuckoo always accomplished her mission and laid her eggs.

That is some moxie.

This brings me to business models, LVMH, and Bernard Arnault.

In 2019, LVMH announced that it had purchased the American icon Tiffany for $16.6 billion, adding to its sprawling luxury goods empire.

The Financial Times reported the acquisition is the latest in four decades of voracious dealmaking by Arnault and marks the luxury sector's largest deal ever. Tiffany, known for its robin's egg blue boxes, will join a stable of LVMH brands that has diversified far beyond its roots in Christian Dior couture, Louis Vuitton luggage, and Hennessy Cognac to include Rimowa suitcases, make-up by pop star Rihanna, and even train journeys across Europe on the Venice Simplon-Orient-Express.

"Arnault is like a cuckoo: he moves in and takes over others' nests rather than building his own," says Dana Thomas, author of Deluxe: How Luxury Lost Its Lustre.

Arnault has never stitched a bag, designed a ring, or launched a product - he and his team have simply made them better.

Going from zero to one sounds sexy and will get you on the cover of magazines, but a better move might be to innovate and make something better.

Anyone who has launched a new product and tried to sell it knows how challenging this process is - even for the best-funded, best-organized blue-chip companies.

Thomas Steenburgh, a marketing professor at the University of Virginia Darden School of Business, was inspired by his early career at Xerox to discover why firms with stellar sales and R&D departments still struggle to sell innovations. The answer, he finds, is that too many companies expect shiny new products to sell themselves.

Steenburgh wrote in the November–December 2018 issue of Harvard Business Review: "Successfully executing an organic growth strategy requires a deep and lasting commitment from the entire senior leadership team because bringing new-to-the-world products to market transforms selling organizations as much as it transforms buying organizations. When new products launch, the best companies are strategically aligned, from the sales force to the C-suite. They recognize that selling these products involves different barriers, and they develop new processes to overcome them."

In today's global business environment, the best companies must deploy the right resources—know-how, technology, processes, and people—to generate consistent, healthy growth.

One of my favorite business books is Build, Borrow, or Buy: Solving the Growth Dilemma, by professors Laurence Capron of INSEAD and Will Mitchell of Duke University's Fuqua School of Business. It explores tactics for generating positive revenue.

The book examines the three fundamental modes—or "pathways"—for obtaining the resources needed to grow. These include developing the resources necessary internally or "building" them; contracting or partnering to get help; borrowing or " buying" them; and acquiring or "buying" them.

According to the authors, companies should be adept at all three.

From my own business experience as an entrepreneur and consumer, I know that the best organizations can innovate, create, and aggregate as needed, recognizing that these three tools, working together, are powerful.

-Marc