Here are 7 of the most pressing questions for CEOs today, about Trump, the economy, and the nation’s political future—and some early answers.
1. How long will the uncertainty last? It’ll last for months, at least. Even as Trump takes a conciliatory tone to his opponents in the early going, his election was such a surprise to the nation’s reigning interests, and his ideas are so antithetical to theirs, that the entire picture for CEOs won’t be clear for awhile. Still, investors already have turned around in their initial horror at the election results and sought buying opportunities.
And to a great degree, uncertainties will continue indefinitely, as other major actors—including political opponents, trading partners and other foreign powers—react to what Trump does and also reposition themselves for a different-looking approach from the White House than what most expected.
2. What will be his first, biggest moves affecting business? CEOs and other observers expect Trump to move right away to make good on some of his major promises: launching a huge expansion of infrastructure projects, getting tougher with American trading, curbing U.S. companies’ transfer of jobs abroad, eliminating or emasculating Obamacare, and reversing many of President Obama’s executive orders concerning environmental regulations.
Yet some of the most important Trump policies will take longer to clarify, including how he intends to go about lowering business taxes, his approach to the budget deficit and entitlements, and what kind of growth plan he lays out to make good on his promise to double the slow economic growth rates of the Obama years.
3. What can CEOs do? First, they can balance their shock with some measure of hope, as Clinton supporter Howard Schultz, Starbucks’ CEO, did this week, calling himself “stunned” at the result but “hopeful” that “vitriol and division” can be overcome. More could take a further step and follow the approach that Warren Buffett, another Clinton backer, demonstrated even before the election, telling shareholders at the Berkshire Hathaway annual meeting a few months ago that, with either presidential candidate winning, America would be just fine.
Some CEOs already are expressing such a willingness to adapt to new realities and even to put the onus on themselves. One response could be better communication. “We’re dealing in a time that is fundamentally anti-trade, anti-globalization, and we in the business community obviously have to do a better job communicating the benefits of [trade] because broad swathes of the population are not buying into the message,” Bob Greifeld, CEO of Nasdaq, said this week.
4. Will Trump be an unbending negotiator? Probably not. A big part of The Art of the Deal, his book and philosophy, is doing whatever it takes to “win.” But at the same time, Trump recognizes the importance of negotiating win-win solutions. And certainly his approach on some key issues—such as Mexican immigrants and the need for “a beautiful wall”—was to lay out a marker that seemed outrageous to many, both to inflame support by true believers and to give himself a negotiating starting point from which he could later pull back.
So certainly Trump can be influenced. CEOs in heavy manufactured goods that are moving output to Mexico, for example, will need to be at his doorstep early to see if they can avoid or mitigate the tariffs he says he’ll impose. Railroad chiefs will want to try to make sure their paths to and from Mexico are unimpeded. CEOs in home-building, agriculture and other verticals will need to reach out to the new president to see if this wall he’s talked about can become a more workable structure so that their low-wage immigrant labor pool won’t disappear.
5. Can a Trump presidency trip the lever on growth? Yes, his approach will roil a number of industries early on, especially including healthcare and trade-focused verticals. But beneath the surface of many CEOs’ initial reactions is the reality that Trump wants to loosen the ties that have bound companies for eight years and unleash the “animal spirits” in the economy again.
One likely result of his business-friendliness is that CEOs finally will loosen the purse strings a bit on corporate treasuries and increase business spending. U.S. companies are building fewer buildings, ordering fewer machine tools and laying less pipe than a year ago, frustrating policymakers and taking much of the starch out of the domestic economy. Trump’s big push will be to get them to come in from the sidelines.
6. What happens to the Republican Party now? While the GOP all needs to try to get back on the same page in a Trump presidency, the party and its new leader already have made some strides in that regard with nods to unity all around. And besides, getting on the same page for sharing greater power is a “problem” of the winning party that is much preferable to the alternative.
But still, Republicans must reformulate their party so that they can address the demands of the electorate that were made pretty clear in the election results: protection and stimulation of American jobs, for one thing. The GOP must deal with the long-term effects of technology and globalization on its constituencies and also address the still-forming new realities of the demographic tilt that continues to move against Republicans in the long run.
7. What happens to the Democratic Party now? The losing party nevertheless will maintain its energy, initially in rallying opposition to Trump and his policies and to the Democrats’ being shoved to the sidelines in Washington. Democratic leaders will make demands that Trump needs to see and address their point of view and come at least halfway, not the other way around.
But after Trump settles in, and over the medium to long term, Democrats must tackle an even bigger number of questions than Republicans, challenges that look more fundamental to the party’s future than they did just a few days ago.
They include: How does the party approach issues of the economy and business where it’s just been rejected? To what extent do they believe that the election results were actually a rejection of Obama’s legacy? Can it catch fire with millennials? Where are future leaders going to come from now that the old guard, represented by Clinton, is fading from the scene? Do Democrats simply give up on their traditional blue-collar constituency? And will expansion of the party with Latinos really be enough to allow Democrats to retake their national edge in the near future?
Trump’s victory was sui generis. His presidency is likely to be as well. These questions may take a while for CEOs to answer in full.
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