Trump-CEO feud could change the game

Corporate allies find president’s behavior too much to risk

The titans of corporate America finally said enough is enough, setting in motion a final break with President Trump.

The turning point came Tuesday in the lobby of Trump Tower in New York, the epicenter of U.S. business and finance, when Trump picked up his pace in burning bridges to U.S. corporate leaders. Speaking to a gathering of reporters, the president again equally blamed counterprotesters at the white nationalist rally in Charlottesville, Va., over the weekend that left three dead and dozens hurt.

Ken Frazier, CEO of pharmaceutical giant Merck, had quit a council of manufacturing executives led by Trump a day earlier, disillusioned with Trump’s refusal to directly name and blame the hate groups. Frazier’s move and Trump’s performance Tuesday opened the floodgate of other CEO resignations that resulted Wednesday in Trump and CEOs’ collective decision to ditch the economic advisory councils the White House had created. Ten CEOs had quit their role before the councils were disbanded.

“Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!” Trump tweeted.

The business community’s response was particularly startling because the president had banked his campaign on his knowledge as a businessman and his ability to do deals that would help him power the economy to faster growth. The Wall Street constituency, it was widely believed, would be a reliable base for Trump to tap for fundraising and collective support for his business-friendly policies and regulatory agenda.

But it was Trump’s other

Trump’s words and actions have created a divide that leaves companies and the White House without a clear way forward.

campaign tactic — appealing to fringe groups — that created a divide that leaves companies and the administration without a clear way forward. The erosion of business leaders’ faith in the president could have broader ramifications in policymaking —in both the White House’s attempt to work with industries and companies’ outreach to influential administration officials.

Trump’s penchant of publicly berating business leaders makes open communications and collaborative sit-downs with industry titans awkward and difficult. Trump, for example, blasted Amazon’s effect on retail jobs Wednesday after The Washington Post, the newspaper its chairman, Jeff Bezos, owns, ran a critical editorial on the president. Similarly, after Frazier’s decision to step down from Trump’s manufacturing council, Trump, using all caps, tweeted that Merck’s drugs carry “ripoff” prices.

Even if Trump’s messages carry a kernel of truth, the timing of his beatdowns arrived at moments that indicate he’s responding more to slights and criticism rather than reacting to genuine economic concerns.

“The business community, like the Republican Senate, is losing faith in the president’s ability to do anything,” said Elaine Kamarck, senior fellow at Brookings and the author Why Presidents Fail.

Moreover, CEOs will be reluctant to liaison with the administration as openly if the White House seems to be fogged in a cloud of incompetence and when they can be subject to public flagging on social media for anything less than total obsequiousness. Going forward, they are more likely to contact other lawmakers to get their points across.

“Lobbying will be less directed at Trump and more at other politicians and legislators that can support business-friendly policies,” says Gary Mangiofico, professor of management at Pepperdine University.

The CEOs’ actions also underscore the emboldening of large companies as they wake to the possibility that significant policy changes in their favor — despite Republicans’ control of both chambers of Congress — may be delayed or not happen at all.

Their collective rejection of Trump has given them strength in numbers and perhaps courage to absorb coming tweet attacks from the president. The CEOs “have nothing to lose. They are in the drivers’ seat now and should never have been cowed,” said Jeffrey Sonnenfeld, professor at Yale School of Management.

Some Republican lawmakers’ open disregard for Trump also could wither away the president’s political capital and damage prospects for resolving policy issues. The president still wants to see his new budget get passed and has to negotiate with Congress to raise the nation’s debt ceiling — the amount of money the country can borrow to help pay its bills. “Charlottesville was the last straw for some Republicans,” says Greg Valliere, chief global strategist at Horizon Investments.

The Trump-CEO feud also could mark a sea change in corporate America’s dealings with diversity and race in the public realm. While generally reluctant to extend politically, large companies increasingly value diversity in workplace, marketing and public communications. And with diversity and inclusion embedded in their mission statements, publicly traded companies could be less reluctant to speak out on the issues in moments of crisis.

“They can ill afford to be connected with these positions that make significant portions of their customers, their employees, (and) their shareholders unhappy,” says John Challenger, CEO of outplacement consulting firm Challenger, Gray & Christmas.

After the dust settles, the corporate America will resume its generally positive outlook on the economy that is on the mend, said Barry Bannister, head of institutional equity strategy at investment bank Stifel.

“The committee was high-profile and reflected optimism about deregulation and business tax changes,” he says. “That is still occurring — and it should.”

AP