When asked about President Donald Trump’s economic policies, most U.S. business leaders are likely to offer a polite but nuanced response. They welcome measures that have improved the operating environment for their businesses and sustained America’s economic outperformance. But they also wonder whether more could have been accomplished by working across party lines and with international allies. That distinction is increasingly critical now that the U.S. is threatened by a rapidly slowing global economy and rising risks of financial market volatility.
While views do—and should—differ on whether the Trump administration should have slashed taxes and regulations in a more efficient and equitable manner, the majority of CEOs will tell you that their businesses received a boost from those measures. Their tax burdens were reduced which, along with incentives to bring back cash held abroad, increased the scope for investments in plant and equipment, not to mention profits and share buybacks. Red tape was cut, reducing costs. Robust household confidence, underpinned by a solid labor market sustaining an above-trend pace of job creation, buoyed domestic demand for their products.
While opinions on the administration’s approach toward tariffs vary even more widely, CEOs generally welcome Trump’s emphasis on a fairer international trading system. Incremental gains from the renegotiation of the North American Free Trade Agreement with Canada and Mexico would pale in comparison if the U.S. is ultimately successful in reducing China’s theft of intellectual property, forcible transfers of technology and subsidies of Chinese companies.
Technology firms will applaud the administration’s efforts to push back against European initiatives to tax and regulate them. Some executives even feel that Trump’s unprecedented attacks on the Federal Reserve may have played a role in the central bank’s remarkable U-turn toward a more accommodating monetary policy that lowers borrowing costs and, more importantly from their perspective given the low interest rates, helps boost stock prices and favor stock options.
Overall, the issue for many U.S. CEOs is less what the Trump Administration has done than how it has done so. This is particularly the case on trade, but also other areas. That underscores what needs to change going forward.
Few expected China to concede quickly to U.S. demands to level the playing field. Beijing’s approach to technology and subsidies is part of a multi-year development strategy packaged in nationalistic rhetoric about regaining the country’s proper standing in the world. But many CEOs feel that changes would materialize faster if the U.S. adopted a more unified approach with Europe. After all, those allies share the same grievances vis-à-vis China.
Scratch the surface and you will also find discomfort about the administration’s eagerness to weaponize economic tools and make frequent use of sanctions. They fear that what the U.S. does to others can be done by others to them in a world where there is less and less respect for rules-based approaches.
There’s similar uneasiness about the president’s attacks on the Fed. The central bank’s political autonomy is seen as critical to its ability to maximize employment, minimize inflation and maintain financial stability. And while economic and financial stability is never a guarantee of business prosperity, the chances of success are a lot lower in a volatile macroeconomic environment.
These doubts are more urgent now because of changing global economic conditions. Europe, for example, has lost most of its growth momentum, with Germany, its largest and most influential economy, already contracting. Unusual political uncertainty in the continent’s largest countries, from the Brexit process in the U.K. and the leadership transition in Germany to complicated government turnovers in Italy and Spain, is slowing economic policy responses.
Europe’s government securities dominate the highly unusual—and steadily destructive—universe of some $16 trillion of bonds trading at negative yields. And all this is happening while the European Central Bank struggles with policies that are proving to be less and less effective and risk doing more harm than good.