Fear over U.S. economy and Trump policies drives employers to reassess global workforce strategies — and HR takes on a bigger role
The recent 0.3% contraction in the U.S. economy — driven by fears about President Trump’s economic policies — has triggered an undeniable shift in how international companies are approaching their workforce planning and investment strategies.
And with economic uncertainty and growing political isolationism creating a volatile business environment, HR and payroll leaders find themselves at the forefront of navigating the challenges.
“Over the past two months, we’ve noticed a clear shift: Fewer employers are looking to expand in the United States. That’s unusual and telling,” said Dan Grace, director of international HR consulting at consultancy Iris Software Group.
The current climate has multinational organizations adopting a more cautious approach to U.S. hiring and workforce investment, with many delaying or downsizing their expansion plans, redirecting investments to more economically stable markets, and exploring nearshoring strategies to reduce dependency on any single country or region.
This trend represents a marked departure from previous years when the U.S. was often a primary target for global expansion.
No more ‘set it and forget it’
HR teams are rapidly reassessing their localization strategies in response to evolving regulations and economic conditions. This includes more granular compensation benchmarking, pay transparency adjustments, and a growing demand for flexible benefits packages that can adapt to changing workforce needs.
“Localization efforts are no longer a ‘set it and forget it’ exercise,” Grace said. “With new regulations, cost-of-living disparities and tax reform unfolding at different speeds across states, HR leaders are adapting in real time.”
Adding complexity to an already challenging landscape, 2025 is shaping up to be the busiest year of system modernization in U.S. payroll history. Fifteen states, including economic powerhouses New York, Texas and Florida, are digitizing their unemployment (SUTA) systems. Other states such as Delaware, Maryland and Minnesota are modernizing their Paid Family and Medical Leave (PFML) and State Income Tax (SIT) systems, meantime. Delaware’s upcoming launch of the first-ever “triple threat plan” for integrated payroll reporting signals a new era of compliance requirements.
The cryptocurrency question
An emerging consideration for forward-thinking HR leaders is the potential role of cryptocurrency in payroll systems. Starting in 2026, crypto platforms in the U.S. will be required to report transactions under new IRS rules — a big step toward mainstream legitimacy of the controversial payment form.
U.S. dollar-backed stablecoins are positioning themselves as a potential solution for cross-border payroll, offering the benefits of digital currency without the volatility concerns that have made traditional cryptocurrency payroll adoption challenging.
“For now, it’s smart to monitor the space and begin thinking through what a crypto-as-a-benefit model could look like for your workforce,” Grace said. “Even if it’s not an immediate priority, the companies preparing now will be ahead of the curve if digital currency adoption becomes mainstream.”
Future-proofing global HR ops
Experts suggest several proactive measures for HR teams looking to navigate this uncertain landscape, among them investing in adaptable tech that can handle real-time reporting and rapidly changing regional rules; designing for resilience by putting into action flexible workforce strategies and benefit programs that deliver tangible value; and partnering with trusted advisers.
“The companies that thrive through economic and regulatory uncertainty will be those who stay informed and act early,” Grace said.
Arvind Rongala, CEO of corporate training firm Edstellar, reinforces that view: “It is the organizations that are investing in agile payroll infrastructure, which combines advanced technology and healthy relationships, that are thriving. This union between prudence and innovation is what is required within the uncertain environment we currently find ourselves.”
HR’s expanding role
Perhaps most significantly, these developments are transforming how organizations view their HR and payroll functions.
Once considered primarily administrative, these teams are increasingly recognized as strategic centers of risk management and resilience, as the experts see it.
As Grace puts it, “In a volatile landscape, HR and payroll teams are no longer administrative back-office functions, they’re strategic centers of risk management and resilience. Global payroll and HR are rapidly evolving. Teams that embrace and flow with the shifts will gain an edge, not just in cost control, but in talent attraction, retention and long-term business continuity.”