President Trump has long criticized the Foreign Corrupt Practices Act (FCPA), arguing that the anti-bribery law hinders American companies from competing globally. This week, he took decisive action, halting enforcement of the law for six months and signaling a potential overhaul.
Yet, rather than widespread support from corporate America, Trump’s decision has sparked concern among legal experts and business leaders. Many worry that gutting the FCPA could actually increase the cost of doing business abroad, as companies would face a riskier, more unpredictable global marketplace.
The Risks of Weakening the FCPA
Since its enforcement ramped up two decades ago, the FCPA has been a key tool in cracking down on corporate corruption, ensnaring major firms like Goldman Sachs, Petrobras, and McKinsey in high-profile bribery cases. The law serves as a global standard for ethical business practices, reinforcing the idea that bribery should not be an acceptable way to secure deals.
William Garrett, a legal expert overseeing the Foreign Corrupt Practices Clearinghouse, likened Trump’s move to paying ransom to kidnappers. “Once you start allowing bribes, it emboldens corruption, making it even more costly for businesses in the long run,” he explained.
Uncertain Future for the Law
Under Trump’s order, the Justice Department has been directed to pause FCPA enforcement while Attorney General Pam Bondi reviews the law and considers new guidelines. The review period can be extended, raising concerns that the law could be permanently weakened or even shelved.
The Securities and Exchange Commission (SEC), another key enforcer of the FCPA, is also in question. Trump’s SEC chief, Paul Atkins, has a history of advocating for lighter corporate oversight, fueling speculation that the agency might follow suit.
This isn’t Trump’s first attempt to dismantle the FCPA. During his first term, he reportedly told former Secretary of State Rex Tillerson, a former oil executive, “I need you to get rid of that law.” Tillerson resisted, but with fewer obstacles in his second term, Trump is now pushing ahead.
Consequences for Global Business
Critics argue that eliminating the FCPA could have unintended consequences, making it harder for American firms to operate in foreign markets. While some businesses complain about the law’s strict penalties—including multi-billion-dollar fines—many also acknowledge that a consistent legal standard reduces uncertainty and levels the playing field.
Moreover, companies still face similar anti-corruption laws abroad, meaning U.S. firms could find themselves in legal trouble overseas even if FCPA enforcement is rolled back at home.
The immediate fallout? Law firms that specialize in corporate compliance may see reduced demand for their services. However, as Garrett notes, the real risk lies in a potential surge of unethical business practices, which could ultimately damage U.S. firms’ global reputation and profitability.
The Bigger Picture
Trump’s move is part of a broader strategy to dismantle government regulations he views as obstacles to business. Whether this benefits American companies in the long run remains to be seen—but for now, many legal experts warn that the short-term gain of fewer restrictions may come at the cost of long-term economic stability.