CEOs must navigate an upside-down world, where tariffs are rampant and tobacco companies are palatable again

Good morning from Geneva.

One under-appreciated feature of the post-COVID economy is that it’s turned some long-held business paradigms upside down. Modern CEOs will have to find their footing in this topsy-turvy world. It’s no easy feat.

Take the recently announced U.S. tariffs on Chinese electric cars and computer chips. Even a decade ago, it was unthinkable that the U.S., the world’s economic superpower, would ever implement such draconian tariffs. Today, however, the Biden administration plans to slap Chinese EVs with a 102.5% import tax and hit Chinese solar cells and chips with a 50% levy.

The short-term domestic consequences for American car and chipmakers are positive, of course, as they will boost Made in America brands. But most U.S. multinationals also must consider their foreign markets. In the past, dominance in the U.S. market often led to competitiveness abroad, but long-term trade wars can dull that edge.

Or consider which companies are considered “good” versus “bad.”

In the pre-COVID economy, tobacco, weapons, and oil and gas companies had some of the worst corporate reputations. Today, defense and energy are considered strategic assets in almost every Western society, making them “good” in the eyes of many. Suddenly, companies in these industries can move from defense to offense in their marketing and public engagement efforts.

Even tobacco companies are no longer as universally shunned as they once were.

At a breakfast hosted by Philip Morris International that I attended in Geneva earlier this week, several business academics—one of whom was a paid PMI consultant—defended PMI and its new mission of “delivering a smoke-free future.” PMI’s IQOS electronic cigarettes create fewer negative externalities, they noted, and the company has an excellent ESG record. That gives PMI the standing to claim to be “better” than, say, a Big Tech company that peddles social media or charges high fees that reflect its monopoly, one of them said.

To be sure, not everyone is on board with this new world of business ethics. The World Health Organization, for example, continues to oppose tobacco companies for the continued harm their products cause. The World Economic Forum still shuns purely defense companies from its annual Davos confab (though it is welcoming aerospace firms, an industry on track to be worth as much as $1.8 trillion by 2035.) The World Trade Organization, meanwhile, still advocates for fewer tariffs.

But for most CEOs, now is a good time to reflect on what this revolution in business means for them. If some of what was good is now bad, and vice versa, it’s likely to alter at least some fundamental assumptions on which their businesses are based.

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Peter Vanham
peter.vanham@fortune.com
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This story was originally featured on Fortune.com