Blog | 17 Jan 2025
Buckle up: Trump era brings economic uncertainty to cybersecurity
Teri Robinson
Managing Editor, Thought Leadership
Elections have consequences. With President-elect Donald Trump promising wide-ranging tariffs, mass deportations of undocumented workers, and adjustments to the Inflation Reduction Act and CHIPS Act, the changes ahead could be substantial. In this second installment of a two-part series, Senior Editor Teri Robinson spoke with Chief US Economist Ryan Sweet about the what the second Trump administration will mean for cybersecurity, including the shifting responsibilities of defenders the safety of critical infrastructure, and the rise of AI. An edited transcript of their conversation follows.
As cybersecurity threats have become more frequent, sophisticated, and destructive, businesses have grown increasingly concerned over potential attacks that can result in crippling downtime. According to research from Oxford Economics on the hidden costs of businesses getting knocked out of service, unplanned downtime costs the Global 2000 $400 billion annually. Executives—particularly Chief Information Security Officers (CISOs), have felt the pressure to lock down security in their organizations as regulators like those at the SEC moved to hold them personally responsible for quickly remediating cybersecurity incidents.
The meteoric rise of generative AI also has put executives on high alert. Even as businesses are intrigued by and have bought into the inarguable promise offered by generative AI, more than half of businesses surveyed by Oxford Economics for an AI Maturity Index say potential cybersecurity issues have kept them from adopting AI more quickly. That concern is even stronger among those companies that lead in AI maturity—63% (vs. 52% overall) cite cybersecurity as the top risk of AI.
If the incoming administration decides to relax regulations, though, those concerns may dissipate—but at a high potential risk if reduced scrutiny leads to relaxed security.
TR: What are the potential repercussions of imposing stiff tariffs and deregulation that could affect tech and, in particular, cybersecurity?
RS: Trade wars aren’t isolated to trade. They affect the flow of goods and services, financial markets vis a vis interest rates, stock prices, and exchange rates. One of the biggest downsides to tariff increases and deregulation is the potential risk to US cybersecurity. Deregulating the tech industry or putting more of the onus on businesses to defend themselves with their own cybersecurity without federal oversight could leave the US more vulnerable.
TR: The uptick in cybersecurity events has put businesses on their toes. How do economists view the problem, and what types of attacks could have the greatest economic impact?
RS: It’s like supply chain shocks. They’re happening more frequently, are more disruptive, and have a larger impact on the economy. Oxford Economics did a cyber scenario that I think is still the most comprehensive economic study I’ve seen on cybersecurity, and it showed the economic costs can be significant. High up on my list are Black Swan events. A cyberattack on part of the US energy grid, either in the Northeast or in the West, could potentially have enormous economic implications very quickly. To put this into perspective, the blizzard that hit the Northeast in January 2016 cost the regional economy around $3 billion because of power outages and business closures. This would be a drop in the bucket if there were to be a cyberattack on the Northeast electrical grid that caused a prolonged disruption. We also learned a lesson when the Texas grid went down in 2021. It wasn’t cyber-related, but it showed what kind of damage could be done, crippling businesses, prompting bankruptcies and resulting in property loss. The Dallas Federal Reserve estimated the outages cost the Texas economy between $80-$130 billion.
And those kinds of attacks could be exacerbated by aging infrastructure. There’s been a lot of emphasis on US infrastructure—the Inflation Reduction Act, the CHIPS Act to various degrees, a bipartisan infrastructure bill—but a lot of our infrastructure is still old. And we’re trying to figure out how the Trump administration will handle that.
TR: From an economist’s perspective what else needs to be protected beyond what is considered traditional infrastructure?
RS: From a macroeconomic perspective, protecting your infrastructure, protecting the flow of credit, it’s far-reaching. We’ve talked about the energy grid on the Northeast and the West, but protecting the Federal Reserve is crucial. If the payment system goes down, it can be catastrophic, particularly for small business.
TR: What are the implications of deregulation for AI?
RS: If there are fewer guardrails, that can be problematic. Historically, during periods where we shifted from over-regulation to deregulation it planted the seeds for problems down the road—for example, lax regulation around the housing bubble that led to the Savings and Loan crisis. With AI, if you don’t have these guardrails, you could lay the groundwork for bigger problems like privacy incidents, breaches, and hallucinations that could compromise business decisions.
TR: How can companies prepare for a shift in policies, particularly when it comes to deregulation of cybersecurity?
RS: It’s all about navigating uncertainty. As an economist, I believe incentives matter and typically win the day. So even if the federal government deemphasizes cybersecurity or putting more safeguards in place, there’s a significant incentive for businesses to do it themselves. Businesses want to protect their intellectual property and their customers because if your customers don’t trust you, you’re not going to be in business very long. When a company is attacked, its reputation is damaged and it is very costly to repair.
Author
Teri Robinson
Managing Editor, Thought Leadership
Teri Robinson
Managing Editor, Thought Leadership
New York, United States
Teri oversees all technology research programmes on the Oxford Economics Thought Leadership team. She is an award-winning cybersecurity and tech content specialist, journalist, and screenwriter who, for the better part of the last decade, led editorial for SC Media, a top-ranking cybersecurity news outlet. Her work has appeared in the New York Times, Inc. magazine and a wide variety of leading B2B titles. Her corporate clients have included Microsoft, Cisco, Iron Mountain, IBM, AT&T and American Express.
Ryan Sweet
Managing Director – Macro Forecasting and Analysis
Ryan Sweet
Managing Director – Macro Forecasting and Analysis
New York, United States
Ryan Sweet is the Global Chief Economist|Managing Director at Oxford Economics where he helps shape and coordinate the team’s global economic analysis and forecasting. Previously, Ryan was the Chief US Economist and led a team that was among the most accurate high-frequency forecasters of the economy.
Prior to joining Oxford Economics, Ryan spent 17 years at Moody’s Analytics as a member of the U.S. macroeconomics team and was also a co-host of the Inside Economics podcast. Ryan has also been an adjunct professor in the Economics and Finance Department at West Chester University of Pennsylvania.
Ryan received a master’s degree in finance from John’s Hopkins University, a master’s degree in economics from the University of Delaware, and a bachelor’s degree in economics from Washington College.
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