Sonnenfeld: DACA Fallout Damaged Trump’s Relationship with CEOs, but it’s Not Unfixable

President Donald Trump’s decision to pull the plug on the Deferred Action for Childhood Arrivals (DACA) program for young undocumented immigrants has sparked backlash from CEOs and business leaders this week, showing that executives are becoming more comfortable with speaking out publicly against the administration’s more controversial political choices.

Chief Executive spoke with Jeffrey Sonnenfeld, Senior Associate Dean for Leadership Studies, Yale School of Management, to find out why CEOs are becoming more comfortable in publicly distancing themselves—and their organizations—from Trump’s contentious political moves and statements, and how the two sides can find common ground moving forward.

Q: What does a group of 400 CEOs from across industries speaking out publicly in support of DACA tell you about the current relationship between the Trump administration and the business community?
A: It reveals that what I and many thought was going to be the most business-friendly administration since Eisenhower, has turned out not to be the case. The administration is confused and caught between moving trains. The business community and the 25% “Know-Nothings” are very different constituencies. [Trump] is consistently leaning toward the nativists and the protectionists, and that is at odds with the business community.

[As a result,] they have to be more on-guard than they thought with this administration, which is far more hostile to the interest of American business than we presumed. The business leaders realize they’re being used as window dressing for ornamental value in these D.C. trips. They have to exercise their voice to be heard, and that their smiling presence standing by potted plants is not the answer.

Q: Why are CEOs becoming more comfortable speaking out publicly?
A: The trade associations, where they’ve had a seven-fold increase in expenditures to business advocacy groups in the past 15 years, are woefully unprepared and too caught up in their own bureaucratic underwear to be ready for this. With all of that expenditure, they should be able to articulate the shared voice of business on immigration, taxes and a number of those common interests.

So, business leaders have realized they have to do this on their own, and that’s a realization that’s not even a full month old. Ever since [Merck & Co. CEO] Ken Frazier stood out as a lightning rod, he’s catalyzed the independent voices of business leaders to compensate for the administration, their trade associations and Congress.

They also realize that the penalties for speaking out are not so severe. Unless they are a major government contractor, they are no longer afraid of being attacked by Trump’s tweet-storms, or any kind of consumer blowback or boycotts.

Q: Are political decisions like this straining Trump’s relationship with business leaders? Can they find common ground moving forward to achieve mutually beneficial goals?
A: They still have the prospect of coming together. It’s not too late to salvage it. He has shattered trust, so people do have their skeptical backs up, but they’re still willing to give him a chance and want to work with him. Every business leader is still working with the U.S. government. We have a highly hybridized economy and they would like the White House to be a part of that team.

Q: Will this backlash have any impact on corporate tax reform efforts that Congress will be working on this fall?
A: If they have too narrow of a focus strictly on tax reform, they’re going to lose grassroots support for recognizing that there is an alignment between what’s good for general business and good for the American public. But if it looks like there’s a departure or fissure between them, then that will only elevate skepticism. The Business Roundtable in particular has been far too narrowly focused on tax reform as a unitary agenda without realizing you have to address the full landscape of critical business issues.