A few months ago, I would have said there was something of a love affair between President Trump and the business community.
Corporate America loved the Trump tax cuts. Businesses got a massive break, with the top tax rate slashed from 35 percent to 21 percent. Large multinationals also now pay much less tax on the profits they earn overseas, and all businesses got a tax benefit from immediately writing off any investment.
Businesses to date have largely used their tax windfall to buy back shares and pay bigger stock dividends. They are also using the extra cash to buy other businesses.
Businesses also applaud the administration's deregulation efforts. The fossil fuel industry and utilities couldn't be happier with the easing of environmental regulations, the opening of more federal lands and ocean for development, and more permits for oil and gas pipelines.
Administration efforts to rein in the Consumer Financial Protection Bureau, the agency charged with protecting households' finances, have been praised by the banks. They also like the administration's pullback on some stiffer banking regulations implemented as a result of the financial crisis.
Businesses' approval of the tax cuts and deregulation was mirrored in the stock market, which soared to record highs at the start of the year. Business confidence also rocketed higher. Surveys of small-business owners and executives of large companies alike showed them about as upbeat as they ever get.
But the euphoria has begun to fade. The stock market has struggled. Businesses aren't ready to jilt the president, but they are increasingly wary of him.
Trump's capricious trade policy has businesses most nervous. The president seems to pick fights with friend and foe alike. Canada and Mexico, arguably our most important allies, are bickering with us over the North American Free Trade Agreement. How this goes has big implications for U.S. vehicle producers and the nation's farmers.
The European Union, another key ally, is upset over higher U.S. tariffs on their steel and aluminum. This anger is conflating with Trump's decision to abrogate the Iran nuclear deal, which the Europeans continue to recognize. The administration has threatened sanctions on European companies doing business with Iran. Will the Europeans take a harder line on American companies in response? That may be what just happened to Mark Zuckerberg, CEO of Facebook, this past week when he was grilled by EU officials.
More worrisome is the seeming on-again, off-again trade war with China. Treasury Secretary Steven Mnuchin said the trade war is on hold — his words — after it became clear that the Chinese would not relent to U.S. demands. There is no larger trading relationship than between the U.S. and China, and many U.S. companies rely on imports from China or sell into that rapidly growing market.
China certainly is flouting the rules, particularly when it comes to giving U.S. companies access to its market or respecting intellectual property. But threatening a trade war threatens the economic success of both countries.
Trump's steel and aluminum tariffs are also putting U.S. companies in the awkward position of having to go to Washington hat-in-hand to request relief. Trump-appointed bureaucrats decide which companies are exempt from the tariffs and which are not. The government is picking winners and losers. No business executive can be comfortable with this.
Nor can they be with the president's tweet attacks on American companies. Trump tweets speciously claiming that Amazon gets a sweetheart deal with the U.S. Postal Service are only his latest. A growing list of successful companies have felt the brunt of his ire. CEOs must wonder who's next.
It is hard to say whether companies would collectively conclude he is bad for business and turn on Trump. If they do, it may be because of his staunch anti-immigration stance.
Businesses' number-one problem is quickly becoming their inability to fill a record number of open jobs. Jobs for skilled workers are going begging, but so, too, are jobs for those with no skills and everyone in between. And the problem isn't going away as the big baby boomer cohort retires. The only hope businesses have is for more immigrants — not fewer, as the president wants.
Ultimately, businesses also may recoil at the large federal budget deficits and resulting higher interest rates headed our way. Companies liked their tax cuts, but they may like them a lot less when it becomes clear they weren't paid for. Nor were the tax cuts for individuals and the increase in government spending that all need to be financed by more government borrowing.