May 26, 2025
Managing Partner
Powerful forces are converging to reshape the competitive landscape. Chief executives must parse shifting trade regimes, translate artificial intelligence hype into profit, manage swelling climate risk, fund growth through disciplined cost management, and preserve unity in increasingly polarized workplaces. The leaders who read these signals early and act on them confidently stand to redraw their industry boundaries.
Economic cycles, technological breakthroughs, and geopolitical swings have always shaped business agendas, yet the mix confronting leaders as 2025 begins feels unusually combustible. In a single planning cycle, tariffs once again dominate trade headlines, generative AI matures from novelty to strategic platform, extreme weather upends asset valuations, investors demand proof that efficiency funds innovation, and social fissures threaten corporate culture. For many executives, every month brings a fresh disruptor and a new acronym to decipher, leaving little time to connect the dots.
Over the past year, Santiago & Company surveyed over a thousand chief executives and senior board members, mapped policy moves across fifty countries, and back-tested AI deployments and climate scenarios. Five challenges emerged as the most universal, the most financially material, and the most intertwined. They do not replace sector-specific imperatives such as banking capital rules or semiconductor export controls, but they frame the baseline environment in which every CEO now operates.
The following narrative offers a checklist and a story arc: how each dynamic evolved, why it matters now, what leading companies are already doing, and which practical next steps can turn uncertainty into an advantage. While you may decide to emphasize one theme more than another, the evidence suggests you ignore none of them. Business history rarely repeats, yet it often rhymes: when multiple currents run fast at once, firms that keep their bows pointed forward, and their crews aligned tend to sail past those that hesitate.
The hype has not abated. Venture funding for GenAI start-ups topped $50 billion in 2024, and corporate investment grew even faster. A Santiago & Company survey of 2,500 senior executives shows that 77 percent of them place AI among their top three strategic priorities, yet only 25 percent report measurable EBITDA impact.
Why the gap? First, most organizations dilute scarce talent across too many pilots. Second, they underestimate the cultural rewiring required to turn prototypes into productivity. Third, they fail to prepare for the looming fragmentation of the AI supply chain as governments move to regulate data flows, chip exports, and sovereignty requirements.
GenAI will matter as much to the operating model as ERP did two decades ago. Technology won't scale itself, and only the CEO can knock down silos, redirect investment, and role-model adoption.
Santiago & Company's research points to three hallmarks of high-performing AI transformers:
Autonomous agents will raise the stakes further. Nearly one-third of executives have committed to deploying agents that can reason, plan, and execute multi-step tasks with limited oversight. Early pilots suggest productivity uplifts of 15 to 30 percent in software quality assurance, financial reconciliations, and logistics scheduling. The winners will be the companies that craft guardrails governance, real-time auditing, and human-in-the-loop checkpoints before scaling.
CEO checklist items
Tariffs are staging a comeback. President Donald Trump campaigned on the promise of broad import duties and, within weeks of taking office in January 2025, raised levies on Chinese electronics, metals, and electric vehicles. Brussels and Beijing responded in kind. Mexico is considering compensatory measures. Other trading blocs are sharpening pencils. The only certainties: the direction of travel is upward, and volatility is the new normal.
For multinationals, the implications extend far beyond headline tax rates. Fresh tariffs ricochet through component costs, shipping routes, inventory buffers, and working capital needs. A Santiago & Company simulation shows that a blanket 60 percent U.S. tariff on Chinese goods and 20 percent duties on imports from the rest of the world could destroy more than $450 billion in trade value by 2030 and inject two percentage points into U.S. consumer-electronics inflation. Companies that map exposure across bills of material and secondary suppliers now will react faster and cheaper than peers that wait.
Yet higher tariffs tell only half the story. A parallel shift in demand is underway. The ASEAN region or "Global South," which is comprised of 133 low and middle-income countries outside China, already generates 18 percent of global GDP, hosts 62 percent of the world's population, and, according to Santiago & Company modeling, will account for nearly half of global consumption growth over the next decade. India, Indonesia, Nigeria, and Vietnam top the list, but Kenya, the Philippines, and Egypt are also surging. Crucially, these markets remain largely non-aligned, allowing them to court investment from multiple power centers without choosing sides.
CEO checklist items
Inflation may be tempered in some economies, yet cost pressure remains acute. Energy prices swing wildly. Wage demands escalate in talent-scarce roles. Capital costs hover near a 15-year high. No wonder 65 percent of Santiago & Company's executives say they must recycle cost savings into growth investments to keep pace.
Many, however, still treat the cost as a budgeting exercise rather than a strategic lever. They slice discretionary spending, freeze hiring, and negotiate one-off supplier discounts. The result is predictable: temporary relief followed by relapse. Average companies capture barely 45 percent of targeted savings, and within a year, half of that evaporates.
Like a crash diet, rapid calorie cuts melt weight, but the pounds creep back. Enduring fitness comes from new habits, nutrition, exercise, and sleep you sustain long after the first weigh-in."
Enduring efficiency typically demands three moves:
Generative AI magnifies opportunity. Advances in large language models allow chatbots to handle policy endorsements, GenAI copilots to accelerate R&D documentation, and computer vision systems to inspect quality on the line. Early adopters report 20-to-30 percent productivity boosts in knowledge worker roles and double-digit reductions in rework.
Political and social fault lines rarely respect company turnstiles. According to Harris Poll research for Indeed, over the past two years, the percentage of U.S. workers who say political disagreements have lowered productivity leaped from 13 to 34 percent. Among millennials and Gen Z, nearly four in ten would quit if their CEO voiced opinions hostile to their own. Similar patterns are visible in Brazil, South Africa, and parts of Europe, albeit with different flashpoints.
The challenge for leadership is to ignore the tensions and risk fragmentation, confront them clumsily, and risk alienating half the workforce or half the customer base. Santiago & Company's CEO Advisory clients increasingly adopt a "constellation" model of engagement:
While a psychologically safe environment doesn't eliminate differences, it channels them into constructive debate. Financial returns follow cultural health. Companies in the top quartile of Santiago & Company's unity index, which measures trust, cross-team collaboration, and inclusion, grow EBITDA twice as fast as those in the bottom quartile over five years.
Climate risk now carries a price tag that directors can measure line by line. Santiago & Company, in conjunction with data from the World Economic Forum, estimates that, on the current warming trajectory, more severe floods, droughts, hurricanes, and heatwaves could erode as much as 27 percent of corporate EBITDA by 2050. Sectors with asset intensity agriculture, utilities, building materials, and communications infrastructure stand at the front of the firing line. Still, service companies are not immune: disrupted data centers, splintered logistics, and insurance-premium spikes ripple far downstream.
The policy arena, meanwhile, is fragmenting. The European Union's Carbon Border Adjustment Mechanism (CBAM) will impose levies on imported steel, aluminum, and fertilizer that exceed EU carbon standards. Japan's GX Basic Policy ties tax incentives to green-transition milestones. China is expanding emissions-trading pilots. The United States, by contrast, is signaling softer enforcement of specific environmental rules, though state and municipal mandates continue to tighten.
Such divergence complicates capital planning. Should a manufacturer double down on renewable-energy investments in Europe to lock in CBAM advantages? Or prioritize storm-hardening Gulf Coast facilities to avoid physical risk losses? Woods argues that the answer lies in a portfolio view of risk, not isolated plant-by-plant analysis.
Executives will focus on first-order effects such as property damage and temporary downtime. However, the bigger hits come from second-order disruptions: lost customer trust, supply-chain refinancing costs, and sudden asset devaluation when a region tightens carbon pricing.
Materials companies illustrate the blind spot. They self-report only 1-to-7 percent EBITDA at risk from climate events. Santiago & Company's bottom-up model triples that estimate after factoring in power-grid fragility and infrastructure risks, water-use restrictions, and Scope 3 pressure.
The good news is that companies that invest early in resilience often find unexpected upsides, such as lower energy bills, faster product innovation, and privileged access to customers seeking green suppliers.
These five dynamics weave together. A tariff shock might accelerate AI adoption in supply-chain planning; a climate-induced flood could expose cost-management gaps; an AI breakthrough might spark social debate over job security. The board agenda, therefore, cannot treat them as silos. Instead, forward-looking leaders create integrated strategy reviews that test assumptions across domains: trade, technology, climate, cost, and culture.
Santiago & Company's experience suggests a cadence that works. Twice a year, the executive committee revalidates macro scenarios and capital allocations. Every quarter, dedicated cells update leading indicators: AI-model performance, tariff filings, run-rate efficiency, carbon-price curves, and workforce sentiment. Monthly, cross-functional squads meet to translate signal shifts into tactical maneuvers, rerouting shipments, re-sequencing AI releases, hedging energy, and accelerating training. Such routines may initially feel onerous, yet they embed agility deep in the organization, allowing leaders to act before pressure becomes a crisis.
Above all, 2025 demands conviction. The evidence base for decisive action is richer than ever: real-time trade analytics, generative AI benchmarks, climate-risk heatmaps, cost-variance dashboards, and employee-sentiment data. The CEOs who integrate these insights, narrate a compelling ambition and mobilize people with empathy will not merely whether the next wave of shocks. They will shape markets, inspire talent, and expand the frontier of what their enterprises can achieve.
Five strategic crosswinds: from tariff spikes to AI breakthroughs, will define the CEO's agenda in 2025. Learn how forward-thinking leaders can seize the advantage while rivals react.
Generative AI is rewriting the rules of corporate strategy and boards that hesitate to take risks. This article reveals how directors can capture the technology's multitrillion-dollar upside while shielding their organizations from its gravest threats.
Generative AI is rewriting the retail playbook: brands that personalize every touchpoint are pulling away from the pack. Discover how Santiago & Company’s latest insights reveal the moves that turn AI investment into measurable growth and lasting customer loyalty.
Scaling generative AI demands CIOs shed low-value pilots, streamline technology and data practices, and embed responsibility at every step to unlock real business impact.
