After 34 felony convictions in New York on May 31, Donald Trump is getting back to business as usual, including an off-the-record chat with dozens of CEOs in Washington, D.C., on June 13.
Whether they support his antics or not, CEOs have to take Trump seriously as a presidential candidate, given that he’s the only realistic alternative to incumbent President Joe Biden — and he could win. Trump remains committed to low taxes and light regulation, making him a natural choice for businesspeople, at least based on those policies.
But there’s also considerable trepidation about a second Trump presidency among business leaders. In its latest quarterly survey of businesses, research firm Oxford Economics asked if a second Trump presidency would represent a geopolitical risk. Thirty-four percent said Trump would pose a “very significant” political risk if he won the White House again, while 42% said it would pose “significant” risk. That’s 76% of businesses that see Trump as some sort of threat to their operations.
Oxford asked about other types of geopolitical risks, such as hostilities in the Middle East, a clash between Russia and the NATO military alliance, and conflict between China and Taiwan. All scored lower than Trump in terms of representing a “very significant” risk. Some business leaders literally worry more about Trump than they worry about major wars.
The biggest risk Trump 2.0 would pose to business interests is his call for additional tariffs on imports from China and everywhere else. Trump would impose an additional 60% tariff on Chinese imports, with a 10% tariff on all other imports. In general, Trump wants to unwind a system of global trade established over decades and make the US economy far more self-sufficient.
Trump has even suggested getting rid of the income tax and replacing the lost federal revenue with new revenue from higher tariffs. Here’s the math on that: Income taxes brought in $2.2 trillion during the latest fiscal year, and annual imports are around $3.8 trillion. So you’d have to start by imposing a 58% tax on imports to raise the missing $2.2 billion. And that doesn’t account for inevitable retaliation by trading partners or the massive distortions that such a dramatic move would cause.
The president can raise or lower tariffs, but only Congress can change tax laws — and there’s basically no chance Congress would ever act on Trump’s plan. Among other things, it would benefit rich people the most while forcing massive price hikes onto consumers. But Trump famously looks for unorthodox ways to accomplish pet ideas and doesn’t usually worry about collateral damage.
Some CEOs may also worry about Trump’s fondness for Russian President Vladimir Putin and the likelihood Trump would abandon Ukraine in its battle to survive the Russian onslaught that began in 2022. A Russian takeover of Ukraine might not affect Western markets immediately, but it would give Russia a huge new launchpad for menacing Europe and possibly invading or trying to destabilize NATO member nations such as Latvia, Estonia, and Lithuania. As long as Ukraine remains independent, it serves as a crucial buffer zone between the territorial Putin and potential targets, once in the Russian orbit, that Putin would like to possess once more.
Drop Rick Newman a note, follow him on Twitter, or sign up for his newsletter.
Trump’s signature stance is his near-zero tolerance for immigration, which has economic implications as well. Though migration across the southwest border has reached unsustainably high levels under Biden, those migrants have mostly gone to work in the United States, which has helped keep spending going and filled many worker shortages. From a CEO’s perspective, migrants help keep labor costs down, and Trump could interfere with that.
Trump was a kind of corporate frenemy during his first term. Businesses loved the tax cuts he signed into law and his regulatory hatchet. But they hated the tariffs he imposed, and a number of companies became targets of Trump himself for their “woke” social policies or some perceived slight the touchy Trump blamed them for.
Most CEOs try not to pick sides in political battles and maintain good relations with prominent members of both parties. That seems to be how most business leaders are hoping to deal with Trump in 2024 — at least until November, when they know whether he won or lost the election.
During his first presidential term, Trump didn’t go far on some issues as he said he would while campaigning. He originally called for 45% tariffs on Chinese imports, for example, but the final tariffs only covered about half of all Chinese shipments to the United States, and they ranged from 7.5% to 25%.
Business honchos seem to hope they can get the best of Trump, without the worst, if he wins a second term. “We’re not looking at it as a package deal,” Joshua Bolten, CEO of the Business Roundtable lobbying group, told reporters recently before hosting Trump at the CEO event on June 13. “We think taxes ought to be low and tariffs ought not to be put into place.” That means managing Trump, if he wins, which is a job even the best CEOs may find challenging.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
Read the latest financial and business news from Yahoo Finance