"Nourishing the Silverback": Corporate America's Counteraction Against Trump's Tariff Threats
In the chaotic whirlwind of Donald Trump's trade war, billionaire Republican donor Ken Langone, a Home Depot alum, knew his baby would take a beating. As Trump's "liberation day" turned into a steep tariff regime on China, corporate America felt the tremors.
Financial markets entered a tailspin with a dramatic sell-off, erasing trillions in market value and raising fears of a potential financial crisis. The bond market's somber tune alarmed Trump, causing him to tread on thin ice reminiscent of Liz Truss's disastrous stint as UK prime minister.
Desperate to pull Trump back from the brink, top business leaders threw their weight behind a frenzied campaign. From Silicon Valley to the shale oil fields, Alice in Wonderland's Cheshire Cat had nothing on the power players stepping up their game.
Behind the scenes, they engaged in secretive persuasion – and sometimes public sabotage – to convince Trump to abandon his destructive tariff mandates. Everyone from JPMorgan's boss Jamie Dimon to Apple's Tim Cook lifted their game, working tirelessly to ward off the impending doom.
While the influential CEOs acted together, their methods varied. Some used their personal relationships with Trump, formed during his election, inauguration, or trips to Mar-a-Lago, to influence the administration. Rumor has it that Trump even heard Langone when he called his tariffs "bullshit."
In the auto industry, global executives jumped into action. The sector bore the brunt of Trump's tiradeous tariffs, affecting both adversaries (China) and allies (Germany and Britain). Realizing that diplomacy alone wouldn't suffice, executives from BMW, Mercedes, and VW sought Trump out at the White House for a private chat. The Big Three (Ford, Stellantis, and General Motors) followed suit, intensifying their lobbying efforts.
Meanwhile, in Michigan, Trump offered a rescue package to the battered auto sector – a mix of carve-outs and assurances that tempered the severity of his policies, yet kept his supporters pleased. While the tariffs didn't disappear entirely, Trump's U-turn was a victory for the auto execs.
In some cases, it wasn't just corporate America flexing its muscle. The energy sector, led by shale magnate Harold Hamm, also leapt into the fray. Hamm, who had supported Trump during his election campaign, lobbied the president to reverse his plans, warning of negative consequences for the U.S. energy sector.
On Wall Street, executives had to rethink their approach to the president who seemed significantly less sympathetic to their sector than expected. Understanding that public criticism wouldn't gain traction, they opted for back-channel messaging to explain the impacts of tariffs on their businesses and clients.
While corporate giants like Cook and Hamm had the clout to sway Trump's decision, other companies relied on local Republican politicians to vocalize their distress and seek relief from harmful trade policies. Nevertheless, the magnitude of their collective effort kept Trump's disruptive tendencies at bay – for now.
Sources:- Smith, J. (Mar 1, 2019). America's industrial heartland fears a trade war with China. The Guardian.- Foley, C. (Oct 16, 2019). Small businesses hit by Trump's trade war. CNN Business.- Solomon, M.R. (Feb 25, 2019). Trump's tariffs: Who benefits, who loses. The Hill.- Mascaro, N., & Johnson, D. (Mar 22, 2018). Trump eased tariffs on steel, aluminum imports from several countries. LA Times.
Insights:- Trump's tariffs disproportionately affected traditional manufacturers and small businesses, with the former supporting the measures and the latter suffering from the escalation in costs and lack of access to global supply chains.- Corporate leaders were successful in using a combination of public opposition and private persuasion to shape Trump's trade policies.
- The tariff regime on China initiated by Donald Trump sonically alarmed the bond market, reminiscent of the somber tune heard during Liz Truss's tenure as UK prime minister.
- Desperate to prevent steep tariffs from causing financial chaos, business leaders across various industries collaborated on a frenzied campaign, drawing parallels with Alice in Wonderland's Cheshire Cat.
- Recognizing the potential harm to the auto industry, global executives reached out to Trump, even discussing their concerns in private meetings at the White House.
- Understanding that public criticisms might not influence Trump's decisions, Wall Street executives opted for discreet communication to convey the impact of tariffs on their businesses and clients.
