Lured by his promises of fat tax cuts and deregulation, Corporate America enthusiastically backed President Donald Trump following his shocking 2016 victory.
But the relationship broke down as Trump failed to condemn racism, attacked major American companies, ignored the climate crisis and imposed tariffs. And the divorce was completed in spectacular fashion this week after Trump incited an angry mob that assaulted the US Capitol.
When Trump took office, the business community initially praised the self-styled CEO president’s pro-business agenda: In late 2016, the influential lobbying group Business Roundtable cheered Trump’s economic team and tax cut promises. The following year Jay Timmons, CEO of the National Association of Manufacturers, urged lawmakers to back Trump’s infrastructure plan and said “all of Congress needs to get onboard the ‘Trump train.”
Both parties struck an entirely different tone this week with the insurrection on the US Capitol, a symbol of American democracy, proving to be the final straw.
The Business Roundtable slammed US politicians for spreading the “fiction of a fraudulent” election, warning it’s a threat to democracy and the economy. Leading CEOs condemned the violence.
And in perhaps the strongest political statement by a major business group in modern history, Timmons – a former GOP operative – called on Vice President Mike Pence and the Cabinet to consider removing Trump from power: “This is chaos. It is mob rule. It is dangerous. This is sedition and it should be treated as such.”
But critics say business leaders should have condemned Trumpism far earlier and in some ways enabled him.
“This is a lesson in not standing up to bullies,” said Eleanor Bloxham, CEO of the Value Alliance, a firm that advises boards on corporate governance practices. “By embracing Trump, they were enabling a very narrow perspective, not a long-term one.”
Senator Sherrod Brown, the ranking Democrat on the Senate Banking Committee, suggested the timing of the divorce was convenient.
“These CEOs have already gotten their tax cuts, deregulation and pro-corporate judges. They don’t really need Trump anymore, so they can finally do the right thing,” Brown told CNN Business in an interview on Thursday. “It’s nice they stepped up with such great courage with 13 days left in the Trump administration.”
‘Oh no, Trump’
To be fair, the relationship between Trump and Corporate America has always been full of ups and downs. And CEOs did provide critical moments of moral leadership during the turbulent Trump era.
Back at the beginning, big business did not back Trump’s candidacy.
“In the primaries, the feeling seemed to be, ‘Oh no, Trump,’” Bloxham recalled of her conversations in 2015 and 2016 with generally Republican-leaning board members.
After Trump won the nomination, many business leaders threw their weight behind Hillary Clinton.
“They never saw him as one of them,” said Jeffrey Sonnenfeld, founder of Yale University’s Chief Executive Leadership Institute. Sonnenfeld recalled that some executives who are active CEOs today threatened to walk out when he brought Trump to a business summit around 2006.
Wait, there’s tax cuts?
But once Trump won the White House, the industry saw him as a vehicle for the pro-business agenda they craved – especially on tax cuts.
“In January 2017, there was great enthusiasm. He was speaking their language,” said Sonnenfeld. “The business community was quite excited.”
By the end of 2017, Trump delivered by enacting sweeping corporate tax cuts that the White House promised would create a roaring economy.
“The Business Roundtable did a deal with the devil,” said Sonnenfeld.
Trump’s tax cuts had a greater impact on Wall Street than Main Street. A lasting acceleration in job-creating investments never materialized, with the windfall largely going toward stock buybacks, dividends and mergers. By early 2019, Bank of America economists dubbed it the “investment boom that wasn’t.”
Beyond tax cuts, Trump set in motion a wave of deregulation that the business community was clamoring for after eight years of the Obama administration. And he appointed pro-business judges, including three conservatives to the Supreme Court.
“They got most of what they wanted,” said Ed Mills, Washington policy analyst at Raymond James.
Clashes over race, climate and immigration
But relations began to fray in the summer of 2017.
First, business leaders including former Disney (DIS) CEO Bob Iger and Tesla (TSLA) CEO Elon Musk slammed Trump’s decision to withdraw the United States from the Paris climate agreement.
And then CEOs led by Merck (MRK) boss Ken Frazier quit Trump’s business councils in August 2017 after the president initially failed to condemn white supremacists at a rally in Charlottesville, Virginia. The advisory committees eventually disbanded, delivering a startling rebuke to the president.
“They didn’t want to be on the wrong side of history,” said Sonnenfeld.
Silicon Valley and other major US businesses have also repeatedly pushed back on Trump’s immigration curbs, especially Dreamers, Sonnenfeld noted, saying “the business community has been one of the strongest voices in fighting the extremes of the Trump administration’s policies such as immigration.”
The question now is whether business leaders will offer support to the Trump movement after his term ends January 20.
Trump and his surrogates have vowed to mount well-funded primary challenges to sitting Republicans who refused to back his attempt to overturn the election.
“You’ve got a lot of Republican businessmen wondering: Am I going to latch onto this Trump movement because it’s still low-tax and pro-energy?” said Michael Cembalest, chairman of market and investment strategy at JPMorgan Asset Management in an interview conducted before Wednesday’s siege on the Capitol.
“On the other hand, there is a lot of other stuff that goes with the Trump movement: anti-trade, intensely anti-immigration and arguably a degree of authoritarianism that isn’t in sync with the party,” he added.
Bloxham, the Value Alliance CEO, said much will depend on whether Trump faces serious consequences, such as impeachment or invocation of the 25th Amendment, before his term ends.
“If there is a strong response,” Bloxham said, “then the Trump brand will be much more toxic.”