• Trump blasted automakers like Ford during the presidential campaign.
• Ford and GM’s CEO joined his advisory councils anyway and logged an early win as a result.
• But toxic politics are undermining any deals that would work for corporate America so they cut their losses.
A few months after Donald Trump was elected President, I made the rounds at the Detroit auto show in January and tried to get a sense of what the car business thought of the new Chief Executive.
After all, Trump had — during the campaign — very publicly taken Ford to task for plans to send auto production to Mexico. And as he took office, the idea of a “border adjustment tax” that would have hit manufacturers of all sorts was on the rise.
But the US auto industry seemed pretty happy to have Trump in the White House, for two key reasons:
First, Detroit expected Trump’s new Environmental Protection Agency to reopen a review of mileage and emissions benchmarks — Corporate Average Fuel Economy, or CAFE, standards — which had been locked in during the last days of the Obama administration. Taking the lead on this, in fact, was the Ford CEO Mark Fields, who pressed Trump to give the carmakers the opportunity to revisit the standards in light of strong SUV and pickup sales. (Fields has since left Ford.)
Second, Detroit wanted a corporate tax cut. And Detroit wasn’t alone. All of corporate America wanted a corporate tax cut. That was where the real glee over Trump was coming from.
The auto industry got its deal fast. In March, the Trump administration announced it would re-open the review process for fuel-economy and emissions regulations.
Trump might have expected some investment and hiring in states critical to his re-election to follow. That hasn’t really come to pass, and for good reason: the carmakers don’t want to add more bulk ahead of an impending sales downturn.
So the deal score at this point could effectively be Detroit: 1, Trump: 0.
But, that also might’ve been a misread. And Detroit’s experience with Trump is instructive in understanding why people were on this panel in the first place, why they stayed, and then why they left so fast.
No more deals
There was only one auto-industry executive left on Trump two panels of business leaders — the Strategic & Policy Forum and Manufacturing Council — by the time the President took to a podium Tuesday and wound up offering a defence of the white supremacists who had marched in Charlottesville, Virginia over the weekend.
That was Mary Barra, who runs General Motors. (Fields left the manufacturing council after losing his post as CEO of Ford, and Tesla founder Elon Musk resigned after Trump said he’d withdraw from the the Paris Climate Change Agreement.)
She wasn’t alone, of course. Even after Merck’s CEO Kenneth Frazier bolted early Monday — citing his personal responsibility to stand up to intolerance — leading to a small exodus, many other executives seemed prepared to stay on.
Perhaps, the groups held out hope that a big tax cut was still in the cards. Certainly, they might have seen how Trump angrily reacted to Frazier and decided it wasn’t worth having to deal with that. One, unnamed CEO told the New York Times’s Andrew Ross Sorkin as much.
So what changed? Sure, Trump’s infamous Tuesday press conference was a trigger.
Ultimately, though, it seems to have dawned on the CEOs that the concessions they might get out of Trump weren’t worth the vast reputational damage that even a peripheral association with the defence of white supremacists would bring.
And Detroit’s small victory also made it clear that gains to be had aren’t so great anyway. American consumers want to buy SUVs and pickups for sure — but they also want good fuel economy in those vehicles.
So maybe the score is really Detroit: 0.5, Trump: 0.
What happens when business can’t take it anymore
I wouldn’t say Trump had an inexhaustible level of support from CEOs who had been running vastly greater enterprises than the Trump Organisation, but if the mood in Detroit was any indication, he was going to get a few passes for bad behaviour. He just wasn’t going to get any for appalling, self-destructive conduct.
What they certainly didn’t want was to wind up with a score that looked more like — Detroit: -1, Trump: 0 — just because she stuck around.
Contemporary business leaders tend to be careful, pragmatic, diplomatic people who exercise a lot of patience with Washington. They want to thrive no matter which party is in power.
Trump won in November in part because some voters saw him as a business-guy billionaire who flew around in his own plane and lived in a tower with his name on it in New York City. He wasn’t a cerebral former con-law professor and therefore he would use his combative business skills to cut a whole bunch of beautiful deals and would further lower the already low unemployment rate and bring greater prosperity to the land.
There is no long game that involves neo-Nazis
Anybody who had seen Trump do his thing in New York for decades understood that this was a con job, but with a GOP-controlled Congress and a longstanding desire among companies to see the US corporate tax rate dropped, it wasn’t hard to look past the theatrics and play the long game.
I personally thought the tax corporate tax cut would happen almost immediately. In America, cutting taxes always wins and this one would be straightforward. You could even imagine Democrats getting behind it.
Naturally, as Trump’s relationship with the business world has completely melted down over the past few days, I reflected on what he had achieved eight months ago, before his comments about the Charlottesville crisis.
He had the CEOs on board. They were wary, and they knew full well that they could come in for some routine Trumpian Twitter abuse, but they went to Washington and they sat around tables for photo ops. And they were even willing to give him some headlines about factory openings and job creation as long as he didn’t do anything more repellent than the repellent things he had already done.
And then, he did.
This column does not necessarily reflect the opinion of Business Insider.
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