Corporate America is breaking with Donald Trump

Markets have been relatively stable as Joe Biden has risen in the polls

To put it in terms a Twitter-happy US president would understand, it has been more subtweet than tweetstorm.

In recent days, leading US industry associations, chief executives, investors and business school professors have issued oblique rebukes of Donald Trump’s suggestions that he may not abide by the results of next week’s election if he does not like them. Most have been carefully worded but, as with any artfully indirect social media post, their meaning has been unmistakable.

Most notably, several of the US’s biggest industry groups joined forces on Tuesday on a statement as striking as it was anodyne.

“We urge all Americans to support the process set out in our federal and state laws,” they wrote. That such traditionally cautious groups felt the need to say this speaks volumes. As anyone who has ever haggled over the phrasing of a statement with so many authors will tell you, its lowest-common-denominator wording was also as close as the business community will come to sending a shot across the president’s bows.


Faith-based investors had urged business A-listers who were keeping quiet to champion a peaceful transfer of power or risk being seen as "complicit in the chaos". JPMorgan's Jamie Dimon is one of the few to do so, though Expensify's chief executive went as far as to implore the 10 million users of its expenses software to vote for Joe Biden because "not many expense reports get filed during a civil war".


Whether hesitant or hyperbolic, these statements all carry the same message: there is a growing consensus in corporate America that Trump is no longer good for business. That represents a sharp change since the start of the president’s term, but also an understandable consequence of what has happened since.

Back in 2017, "business leaders held their nose and engaged in dialogue with this president because they saw some immediate financial opportunities and decided to look past what some wanted to believe were just stylistic peculiarities", recalls Aron Cramer, chief executive of BSR, a group which helps multinationals navigate their social responsibilities.

Those opportunities were quickly realised, in the form of deregulation and a historic cut to corporate tax rates. But even early on they also came with sharp disagreements over tariffs, immigration, racist violence and environmental policy.

Once tax cuts were in the bag, "the business relationship went from the good, the bad and the ugly, to just the bad and the ugly", remarks Bennett Freeman, an adviser to companies on labour and human rights issues.

Share prices rose, but chief executives found themselves having to manage trade wars, growing divides among staff and customers, and threats to the status of employees who held visas or were brought to the US illegally as children.

Stakeholder causes

And as big companies embraced “stakeholder” causes, from inclusion to environmentalism, Trump espoused a dated caricature of capitalism: his focus on stock markets as the yardstick of economic progress made him look like one of the last devotees of Milton Friedman’s shareholder primacy doctrine.

His inattention to issues such as economic inequality, racial injustice and climate change also forced reluctant chief executives to fill the void by speaking out on politically-charged topics they would rather avoid.

Corporate America is no political monolith. In industries such as healthcare and energy, many executives still believe Trump would be better for their bottom lines. Yet fear of Biden’s agenda is ebbing. As a recent PwC survey shows, executives worry Democrats would raise taxes but believe Trump would be worse on US-China relations, immigration and foreign policy.

Markets’ relative stability as Biden has led the polls supports this view. Polls also explain executives’ willingness to turn their backs on Trump as the risk of speaking out has fallen with his re-election chances.

Most executives entered 2020 determined to avoid getting sucked into a bitterly contested election. Their belief that the Trump administration handled the pandemic and the racial justice protests that have defined this year less capably than their companies changed the equation.

But it is only recently that executives have come off the fence, as the president's musings about not accepting a peaceful transfer of power tested companies' vaunted conversion to social responsibility, notes Deepak Malhotra. The Harvard Business School professor wrote a letter signed by more than 650 academics, which urged executives to speak out against the threat they argue the president poses to the republic.

“The pendulum often swings left to right but here’s something that might rip the pendulum off the clock,” he argues.

In private conversation, business leaders have run through the worst-case scenarios. If a peaceful transfer of power looks doubtful, BSR’s Cramer says, top executives would quickly make their alarm public, not least to congressional Republicans, who understand the risk of alienating donors.

Whether or not the subtweets become a tweetstorm, chief executives who once dreaded @realDonaldTrump tweets have lost their fear of the man behind them. They got the tax cuts they wanted and see little to lose in breaking with him now. – Copyright The Financial Times Limited 2020