Good morning. CFOs and their corporate tax departments are facing a convergence of changes this year.
For starters, consider tariffs. They are a favorite tool of President Donald Trump, whose trade policy calls for imposing heft levies on countries such as Canada, Mexico, and China as soon as Feb. 1. That said, Wilbur Ross, who served as commerce secretary in President Trump’s first cabinet, recently told Fortune that the president will not have to follow through on tariff threats.
Trump recognizes that the mere threat of export tariffs can help him achieve his goals, Ross said. Speaking from his own perspective and not as a Trump spokesman, he added that the reason other nations will acquiesce is that they can’t afford an all-out trade war.
The topic of tariffs came up in my conversation with Rema Serafi, vice chair of tax at KPMG US. Her advice: Companies should take the impending tariffs “very seriously.” Trump has indicated that it’s going to happen, but the “extent to which it takes place and when it takes place are all contributing to the uncertainty,” she said. This poses an opportunity for tax directors to really talk with the C-suite about how to reassess their supply chains and think about business differently, she added.
As a tax leader, Serafi also points to more issues that are impacting the Fortune 500 space beyond, which she refers to as the “tax policy trifecta”:
—The 2025 tax cliff: the impending expiration of the Tax Cuts and Jobs Act (TCJA). Before it expires at the end of 2025, Trump will need to extend the provisions in his signature TCJA, a 2017 law.
—Global tax reform: uncertainty around the Organization for Economic Co-operation and Development’s (OECD) global tax deal. Trump signed an executive order last week that stated the deal had “no force or effect in the United States.” Known as “Pillar Two” the OECD’s measure requires multinational corporations to pay at least 15% in income tax.
—Waves of regulatory changes that come with a new presidential administration.
These are contributing factors to the reshaping of the corporate tax function, Serafi said.
Is there an essential factor in navigating this uncertainty? Data, and in real-time, she said.
KPMG’s clients are very much reckoning with the idea that they need to wrangle data more than ever, Serafi said. There needs to be a lot of modeling and scenario planning taking place now with the expectation of change, she said.
“It’s very important for the CFO to get a handle on the data and make sure that they’re staying informed about legislative and regulatory changes,” Serafi said. However, this is also an opportunity for CFOs to position their tax departments as strategic drivers of the company’s success, she said.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Mark Weinswig was appointed CFO of Turtle Beach Corporation (Nasdaq: TBCH), a gaming accessories provider, effective Feb. 3. Most recently, he served as CFO at Ouster following its merger with Velodyne Lidar. Weinswig previously held CFO positions at other companies, including Avinger, EMCORE, and Avanex.
Robin Harries was appointed CFO of trivago N.V. (Nasdaq: TRVG), a global hotel and accommodation search platform, effective April 1. Harries returns to the company, previously serving in various leadership positions between 2012 and 2018. He played a vital role in the 2012 acquisition by Expedia and the company’s Nasdaq initial public offering in 2016.
Big Deal
The Chinese AI startup DeepSeek shocked the U.S. tech industry this weekend when it unveiled a cutting-edge large language model that could compete with top competitors like OpenAI—and that is built on a shoestring budget. The news delivered one of the biggest one-day wipe-outs to U.S. tech stocks in recent memory on Monday, with Nvidia shedding roughly $600 billion in market cap as its stock dropped nearly 17%.
Founded by the head of a Chinese quant trading fund, DeepSeek has investors suddenly, and radically, questioning their assumptions about the AI business. Venture capitalist Marc Andreessen has dubbed DeepSeek’s rise “AI’s Sputnik moment,” referring to when the Soviet Union beat the U.S. in launching a satellite into space.
DeepSeek’s success with relatively limited compute power compared to its U.S. competitors suggests demand for advanced AI chips might not prove to be as high as tech bulls have anticipated. Critics of U.S. export controls on China, meanwhile, say restricting access to high-end technology may have inadvertently spurred innovation at labs like DeepSeek.
Both those narratives could prove shortsighted, however. Moreover, several voices in the AI sector have said DeepSeek likely had better access to top-flight Nvidia chips than it has let on.
Going deeper
“Ex-Intel CEO Pat Gelsinger sees 3 reasons for optimism after DeepSeek’s startling debut,” is a new Fortune article by Geoff Colvin. Pat Gelsinger, who abruptly stepped down as Intel’s CEO in December, took a long-term view of DeepSeek’s creation of an AI chatbot that reportedly equals ChatGPT. One reason for Gelsinger’s optimism: History says that making computing “dramatically cheaper will expand the market for it. The markets are getting it wrong, this will make AI much more broadly deployed.”
Overheard
“I couldn’t feel better about Greg. But I’m just not doing interviews anymore. At 94, bridge isn’t the only activity that’s slowed down for me. I’m still having a lot of fun and am able to do a few things reasonably well. But other activities have been eliminated or greatly minimized.”
—Berkshire Hathaway CEO Warren Buffett told Fortune’s Shawn Tully in an email regarding Greg Abel, who was chosen to eventually succeed Buffett.