From AI to hardware costs: Enterprise tech leaders prepare for Trump 2.0

For chief information officers, AI continues to be top of mind. While the urgency to deploy the technology inside their organizations continues unabated, CIOs are keeping a keen eye on how the federal government might play a role in reining in the technology, or encouraging it to thrive.

“The way AI affects a CIO’s job is primarily around strategic planning," said Suvajit Basu, the former CIO of Goya Foods. That includes things like whether AI will be “intelligent enough" to improve the efficiency of logistics planning, and how it will shape the workforce, he said.

Tariffs and higher hardware costs

One of the first areas Trump can make an impact is in tariffs, where the president-elect can act without seeking congressional approval. He has proposed tariffs of at least 60% on China, and 10% to 20% on other countries—lifting U.S. tariff rates to their highest since the 1930s.

Many American companies rely on foreign-made hardware—including laptops and smartphones—for their employees. If prices for those goods go up, some CIOs say their technology budgets could be affected.

Thomas Phelps, senior vice president of corporate strategy and CIO of Long Beach, Calif.-based Laserfiche, said he is concerned because the software company relies on some imported hardware, and its technology budget is already fairly set for next year.

Others say they are ready for anything. John Roese, global chief technology officer and chief AI officer of Dell, said companies are generally adaptable to changing tariff rates. “We were able to navigate supply chain shortages, tariffs, and whatever happens, we’ll adapt," Roese said.

AI under the spotlight

Since the launch of generative AI-based chatbots two years ago, AI has become a far bigger issue for the federal government than it was during Trump’s prior presidency.

It is likely that President-elect Trump will take a more relaxed approach to federal oversight of AI, especially as Big Tech companies and startups alike have pushed for a light touch on AI safety rules. The benefit of looser rules, they say, is keeping innovation flowing.

Trump has already said he would dismantle the Biden administration’s executive order on AI, which sought to manage a range of the technology’s threats from privacy to national security.

Since the order was enacted last year, the business community’s reaction to it has been mixed. Dell’s Roese said that while it provided a framework, it “didn’t change what private industry was doing." “It reflected what was happening," he said, “as opposed to shaping it."

Still, removing the order has the benefit of cutting bureaucracy and speeding up the release of AI products, according to Daniel Castro, vice president of the Big Tech-funded think tank Information Technology and Innovation Foundation. Companies interested in using AI in riskier areas like hiring or extending credit might also feel more comfortable making the leap, he said.

The move also puts more work on companies’ shoulders to investigate AI model safety and potential bias. Vish Narendra, CIO of Graphic Packaging International, said AI regulation helps enterprises understand why different models spit out various results. “The ethics of AI is going to be a minefield that companies are going to have to tiptoe around for a while until they figure it out," he said.

Doing away with Biden’s AI order doesn’t mean there won’t be any AI rules at all, said Mark MacCarthy, a nonresident senior fellow in governance studies at the Brookings Institution. “The real change will be to put AI regulation back in the hands of sectoral regulators," he said, putting employment and financial regulators in position to manage AI’s use in those areas.

Dealing with more deals

The administration of President-elect Trump will likely bring about a deregulated mergers-and-acquisitions landscape, according to Chris Farmer, founder and chief executive of venture-capital firm SignalFire.

“You need a robust M&A market for the venture market, and frankly, the innovation economy in general to thrive," Farmer said.

That is a good thing in the age of AI because the technology will “continue to feed the market as larger companies will try to acquire talent and technology," Basu, the former Goya CIO said.

Plus, the new Republican administration will likely encourage “risky bets" on AI development, according to Shawn Helms, co-head of the technology transactions and outsourcing practice at law firm McDermott Will & Emery.

Still, a more freewheeling M&A environment isn’t all good news for CIOs.

While vendor acquisitions might improve the suite of products tech leaders have to choose from, it also creates more work because they will need to ensure their IT systems are integrated and consistent, said Basheer Janjua, chief digital officer at software firm CloudBees.

The recent Broadcom purchase of VMware, for instance, drew the ire of some CIOs because the microchip company made changes such as shaving down VMware’s product offerings and ending perpetual license sales.

At the moment, it is too soon to know what President-elect Trump is thinking. But Dell’s Roese, who says the personal computer giant has worked with the Trump administration in the past, said it would work with them again.

“We’ve been doing this for a very long time," he said. “Many of these technologies are kind of above politics."

Write to Belle Lin at belle.lin@wsj.com and Isabelle Bousquette at isabelle.bousquette@wsj.com