By Carey Durkin Treado
When more than 1,300 people at the U.S. State Department lost their jobs in a mass firing this summer, most headlines focused on what it meant for American diplomacy. But the layoffs are about more than embassies and foreign policy – they could also make it harder for U.S. companies to compete in global markets.
The July layoffs – part of a sweeping Trump administration reorganization effort, with more cuts still expected – eliminated the State Department’s Business and Human Rights team, which helps American businesses avoid committing human rights abuses and violating international laws.
As an economist who studies international trade, I know that BHR is an area of growing importance for both global governance and U.S. competitiveness. In addition to being an academic, I have worked at several U.S. trade agencies and the World Bank, and in 2019-20 I served as a Franklin Fellow with the State Department’s Bureau of Democracy, Human Rights and Labor. In that role, I worked closely with the BHR team and saw how critical their expertise was in helping U.S. companies navigate shifting global human rights risks and regulations.
Losing that support puts American businesses at risk of falling behind market trends and expectations.
The rise of business and human rights policy
Global norms governing business and human rights have been evolving for more than 75 years, starting with the 1948 Universal Declaration of Human Rights. While that landmark document was geared toward governments, in 2011 the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises represented explicit guidance from member countries – including the United States – that companies, not just governments, are responsible for respecting human rights.
This guidance means that businesses must avoid causing or contributing to human rights abuses through their operations or supply chain relationships. Potential supply chain concerns include both “upstream impacts,” such as purchasing from suppliers that use forced labor, and “downstream impacts,” such as selling products to oppressive governments.
These sorts of risks are more common than you might think. Nearly 28 million people are in forced labor globally, making products from cotton to car parts, according to the International Labour Organization. Downstream concerns have focused recently on the sale of AI and surveillance tools to authoritarian governments such as Iran. Avoiding these abuses not only reduces business risk but also helps weaken incentives for such practices.
For decades, the State Department has taken the lead within the federal government in the task of promoting U.S. human rights policies globally. Historically, its three main responsibilities in this area have included reporting on human rights conditions at the country level, providing foreign assistance to promote human rights, and engaging in diplomatic efforts to improve human rights conditions globally.
The portfolio of the BHR team fell mainly within this third area of responsibility and included providing expertise as international policies related to business and human rights continued to expand.
The rise of human rights due diligence laws
Over the past 10 years, some of the world’s largest economies have begun to enact laws that require businesses to conduct risk analyses and publicly report on their human rights impacts. These laws – known as human rights due diligence, or HRDD, laws – have been passed or proposed in the European Union, France, the Netherlands, Germany, the United Kingdom, Australia, South Korea and Thailand.
Of particular importance is the EU Corporate Sustainability Due Diligence Directive, which was adopted by the EU in July 2024 and will begin to go into effect in 2028. Its broad scope will reshape compliance for global companies across markets, industries and supply chains.
Although it is too soon to measure the full impact, many companies and industry groups have endorsed human rights due diligence laws. Industry groups and associations have published statements in support of HRDD laws, which they see as leveling the playing field for responsible business activity. A 2025 survey of 1,300 German corporate decision-makers found that most believed their country’s HRDD law gave them an edge over European competitors – and 44% said it gave them an advantage over U.S. and Chinese companies as well.
The US falls behind on sustainability
U.S.-based multinational companies are subject to the HRDD laws in the countries in which they do business. Starting in 2028, these companies will need to comply with new human rights laws if they want to participate in the EU market. Although some industry groups are in support of these laws, others, such as the U.S. Chamber of Commerce, have expressed concerns about the implementation timeline and some specific requirements.
Prior to the reorganization, the State Department worked closely with multilateral and international organizations, as well as other governments, to establish clear policy frameworks for business and human rights. By eliminating the Office of Multilateral and Global Affairs, which housed the BHR team, the reorganization of the State Department has effectively eliminated this source of expertise and support for U.S. businesses operating in global markets.
In my professional experience, which stretches back to the economic boom period of the 1990s, U.S. competitiveness depends upon a clear understanding of global markets and policies. U.S. businesses must be able to work within the regulatory framework of the countries of their suppliers, partners and customers.
In addition to government regulations, U.S. corporations face pressure from their consumers and investors, who are increasingly interested in supporting corporations that can demonstrate responsible business practices. From fair-trade coffee to environmental, social and governance investment portfolios, markets are increasingly placing value on products and businesses that can demonstrate respect for human rights. Despite political controversy and backlash, market analysts continue to predict steady growth in investor demand for ESG investment opportunities, with ESG assets on track to reach $40 trillion by 2030.
In order to best position U.S. businesses to understand and navigate the emerging role of human rights issues in global markets, the U.S. government needs expertise in these issues. By jettisoning that expertise, I believe the country risks weakening its global business position.
Carey Durkin Treado is Associate Teaching Professor of Economics at the University of Pittsburgh.
JimboXYZ says
American companies have been their own worst enemy for competitiveness. This goes back to the 1970’s when the Japanese were making more fuel efficient cars. Then the Japanese wages got to the point where it was cheaper to compete with Chinese labor. The world’s economies gravitate towards the cheapest source of labor & materials. Reducing government employees that are no value added eliminates cost, those savings are, at best, passed on to taxpayers. There’s enough nepotism & cronyism in this world to still have inflation, throw in a little greed for gouging & the excuses for shortages of labor & materials, lower demand for products & we have Boston Whaler shutting down operations in Flagler County in 2026,opting for their Volusia County facility that has plenty of capacity to meet the demand for boats of all sizes in their product line. We all need to cut thru the BS of boardrooms & the executive’s decisions to be profitable. That has zip to do with being competitive. The wealthiest have never suffered thru economic downturns, they’re always finding ways to charge the masses for their extravagant lifestyles. And they are always the top of the food chain to skim their cuts in the most prosperous of economic times. So what is it ? USA corporations can’t compete with the Chinese with supposedly better products, can’t compete with the Chinese with tariffs that protect the USA corporations. All any of the rest of us know, the masses as the rest of us either lose a job or get told our fair share is a series of percentage increases for the same service & products we were always getting. And they send the prettiest girl they can hire in a revealing outfit to break the bad news, that’s if they just didn’t raise the price in the middle of the night to let us figure out what they were up to while we were sleeping, price increase updates that are done as a midnight scripted database update. Or driving to the gas station and not being there when the gasoline price increased 10-20-30 cents per gallon mid-week/middle of the night. I have zero sympathy for the one’s that profited the most over the last 4-5 years for that gouging alone, same one’s that were doing it to us under Bush-Cheney pretty much. They’re still doing that to the majority of us today. Let’s not empower them for legitimizing their own actions to become less & less competitive. That’s their own self-inflicted greed. And they’ll restructure like GE did to avoid financial responsibility & emerge from a stock price that is cheaper than the paper it’s printed on to be valued by the fraud & abuse experts to be worth +/- $ 270+/share today of their next round of fraud & abuse, that Ponzi Scheme.
Deborah Coffey says
Got it, but what we really need to know is how much money the Treasury has gained from all these salaries that are no longer being paid, the tariffs, the Trump interference with colleges and universities, the bribes to businesses, etc. One would assume that the Treasury’s bottom line would be booming by hundreds of billions of dollars and maybe even a trillion. Or, is all that savings going directly into Trump’s pocket? How much is being stolen?
AI Overview
No, the U.S. Treasury balance is not rising in 2025; it is being rebuilt after being drawn down earlier in the year due to debt ceiling constraints. This rebuilding effort is necessary to finance the country’s ongoing and substantial budget deficits.
Here is a breakdown of the key factors affecting the Treasury balance:
Deficit-fueled debt
The U.S. government is running an annual deficit, with the Congressional Budget Office (CBO) projecting a fiscal year 2025 deficit of around $1.9 trillion.
With spending exceeding revenues, the federal government must borrow to meet its obligations. This increases the total national debt rather than boosting the Treasury’s cash reserves.
Cash balance replenishment
During early 2025, the Treasury General Account (TGA), the government’s checking account, was depleted to avoid breaching the debt ceiling.
After the debt limit was addressed, the Treasury began rebuilding its cash balance by issuing additional debt.
As of September 2025, the Treasury projects a cash balance target of $850 billion by the end of the month. This balance was rebuilt with significant borrowing after falling much lower earlier in the year.
Increased borrowing
To finance the budget deficit and rebuild its cash reserves, the Treasury has been issuing a significant amount of new debt.
In July 2025, the Treasury announced it expected to borrow over $1 trillion in the third quarter alone, a figure much higher than previous estimates.
In short, while the Treasury is currently replenishing its operating cash reserves, this is part of a cycle driven by deficit spending. The overall trend remains one of increasing national debt throughout 2025, not a rising balance of cash on hand.