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Yahoo
06-04-2025
- Business
- Yahoo
CEOs had said they'd speak out against Trump if stocks sink 20%. After the latest meltdown, they're still silent but may be ready to act
Corporate executives who gathered at last month's Yale CEO Caucus were surveyed on when they should collectively voice their concerns about President Donald Trump, and most said it would take a 20% drop in the stock market. The Nasdaq and Russell 2000 have already entered bear market territory, while the S&P 500 is getting closer. CEOs have largely avoided public criticism of President Donald Trump as he rolled out his tariffs, but the recent stock market carnage may trigger a change. Dozens of top corporate executives who gathered at last month's Yale CEO Caucus were surveyed in an impromptu poll on when the stock market should cause them to collectively voice their concerns about Trump. According to the Wall Street Journal, 44% of CEOs said a 20% drop, 22% said a 30% decline, 10% said a 50% crash, and 24% said it's not their role. The question didn't specify the starting point for measuring the market loss. By some measures, stocks have crossed or are near the 20% threshold. The Nasdaq and Russell 2000 have tumbled more than 20% from their 52-week highs, entering bear market territory. The S&P 500 is down 17%, and the Dow Jones Industrial Average is off 15%. The losses are less steep, however, if you start from Trump's inauguration or when the poll was conducted in mid-March. Still, the two-day stock rout after "Liberation Day" wiped out $6 trillion in market cap and marked the worst meltdown since the early days of the COVID-19 pandemic in 2020. To be sure, some executives have reportedly voiced concerns about tariffs behind closed doors in earlier meetings with the president and his staff. But in public, they have remained reticent to avoid angering Trump. Yale School of Management professor Jeffrey Sonnenfeld, who organized the March summit, told the Journal on Saturday that top CEOs have expressed frustration to him, but think trade groups should more forcefully oppose the tariffs or make collective statements. "They don't want to be the lightning rod," he said. "Then it becomes personalized to them." Similarly, an unnamed board member of a US company told the Financial Times on Friday, "You don't want to be the barking dog for everyone else because you're going to be the one who will get shot." Another corporate board member told the FT the best approach is to lobby Trump and his advisers privately and say that tariffs would hit his core constituents with higher prices and unemployment. For its part, the Business Roundtable said in a statement on Wednesday that it supports Trump's goal of securing fairer trade deals but warned "universal tariffs ranging from 10-50% run the risk of causing major harm to American manufacturers, workers, families and exporters." But there may be signs of more opposition from Corporate America. Trump adviser Elon Musk appeared to break with the White House's trade war on Saturday, when the Tesla CEO expressed hope for a "zero-tariff" system between the US and Europe that would create "a free-trade zone." And earlier on Saturday, Musk belittled White House official Peter Navarro, who was reportedly a key figure on the tariff policy, suggesting on X that his Harvard degree is "a bad thing" and that he has never built anything. Meanwhile, tech journalist Kara Swisher posted on Threads on Friday that "a passel of high profile tech and also finance leaders is making a trip to Mar-a-Lago to read Trump the riot act — um talk common sense — to him on the tariffs." She added that Musk was also in their crosshairs for "his 'idiotic chainsaw' antics and more," alluding to the drastic cuts to federal agencies this his Department of Government Efficiency is spearheading. The White House and Tesla didn't immediately respond to requests for comment. On Sunday, Treasury Secretary Scott Bessent gave no indication that Trump will back off from this aggressive tariffs and said there doesn't have to be a recession, despite Wall Street pricing in greater odds of a downturn this year. In an interview with NBC's Meet the Press, he also downplayed the massive stock selloff as a short-term reaction. 'One thing that I can tell you, as the Treasury secretary, what I've been very impressed with is the market infrastructure, that we had record volume on Friday. And everything is working very smoothly so the American people, they can take great comfort in that,' he said. This story was originally featured on Sign in to access your portfolio
Yahoo
01-04-2025
- Business
- Yahoo
Trump is knowingly steering the economy off the cliff with tariffs
Over the weekend, Donald Trump's reassurance of a more generous approach to tariffs was reversed again, apparently returning to draconian across-the-board 20% tariffs. The president's imminent Rose Garden 'Liberation Day' announcement of universal tariffs on everything coming into the U.S. from everyone—accompanied by the Trump-driven 10% decline in the stock market over the last month—is just the latest example of how Trump's capricious tariff tantrums are steering the U.S. economy straight off the cliff. Given the near unanimous chorus of business leaders and economists, one must wonder what motivates Trump's destructive decrees. As Trump himself confessed this weekend on NBC, 'I couldn't care less if car prices go up!' The problem is not tariffs—the problem is Donald Trump, plain and simple. Per our Yale CEO Caucus survey results, 90% of CEOs actually support tariffs, when they are used strategically and selectively. These business leaders support the use of selective tariffs to rectify genuine trade imbalances and constrain foreign dumping into the U.S., undermining U.S. producers in sectors such as steel. But these worthy goals often seem to be subjugated to Trump's personality-driven vendettas, such as punishing longtime nemesis Justin Trudeau; and even more importantly, Trump's idiosyncratic, capricious rollout of tariffs has made it all but impossible for companies to invest at all, hampering Trump's own stated goal of bringing investment and jobs back to the U.S. Already, there is a confusing array of 12,500 tariff categories across 200 trading partners. We tallied up Trump's tariff pronouncements over the last two months and found no less than a head-spinning 107 instances of paradoxical flip-flops on tariff policy, often with same-day reversals. That does not even account for often contradictory guidance from Trump's deputies, which are then subsequently overruled by Trump himself. Businesses need predictability and stability; no company can authorize billions in capital spending to build new plants or hire new workers when trade policy changes not day by day, not hour by hour, but in some cases, literally minute by minute. During our Yale CEO Caucus this month, CEOs groaned and cringed each time CNBC's Eamon Javers read off a new tariff policy reversal, with seven flip-flops over our three-hour event. Trump's defenders argue this is all part of his 'art of the deal'—to punch counterparties in the face so hard that they are knocked off balance and are all but begging for a deal. But the reality is, Trump is getting snookered in these deals, as companies merely repackage existing and preplanned capex spending into gauzy, headline-drawing 'announcements' of 'new investments' in the U.S. The veneer of glitz and glamour of fawning Oval Office press conferences announcing these new investments hides a much seamier reality, as much-ballyhooed new 'investments' such as Foxconn's planned $10 billion electronics factory in Wisconsin turn into abandoned shadows and idled plants. Meanwhile, foreign leaders and companies offer token concessions with little genuine benefit to the U.S., while racing to evade tariffs by rerouting supply chains through neutral countries, brazenly and openly defying Trump while paying lip service to his whims. That is why 90% of CEOs polled at our Yale CEO Caucus said that Trump's tariffs are backfiring on the U.S. These CEOs, like everyone else, are looking at ample data pointing to the widespread havoc wrought by Trump's tariff tantrums. Not only have Trump's botched tariff tantrums helped chop about $7 trillion in value off the stock market since his inauguration—enough to fund the government for an entire year—but the costs are being felt in the real economy. Far from bringing manufacturing and jobs back to the U.S., Trump is killing American manufacturing, hurting U.S. workers, and bringing the entire U.S. economy down with him. Inflation expectations have jumped to 32-year highs; consumer confidence has plunged 25% across both the University of Michigan and Conference Board surveys as consumer spending falls the most in five years; NFIB Small Business confidence has plunged 50%; the labor market is deteriorating as the number of new layoffs quadrupled over the last three months; capital spending and investments have come to a standstill; and GDP growth forecasts have come down by 1%—a head-spinning reversal of economic fortune as the initial euphoria of Trump's pledges of tax cuts and deregulation morphed into the Frankenstein monster of all tariffs, all the time. Of course, many business leaders wonder what motivates Trump's destructive tariff tantrums. On one hand, Trump has obsessed over tariffs since at least the 1980s; and he has long, reductionistically viewed the U.S. balance of trade as if he were still running the Trump Organization, which tries to sell more than it buys every year. But the sheer, avoidable, intentional chaos of Trump's tariff rollout, and his willingness to ignore significant stock market drawdowns, suggest there may be other explanatory factors. Some CEOs have privately suggested that Trump may be trying to induce a recession early in his term to 'clear the deck' well before midterm elections—though that assumes a greater facility for long-term strategic foresight than is usually associated with Trump. More likely, perhaps Trump has no plan and is just making things up on the fly, with arbitrary megalomaniacal impulses unconstrained by yes-men staff. In Trump's tantrums, psychoanalysts might find strong resemblance to what Sigmund Freud called the 'death drive' pathology of entrepreneurs, or what psychiatrists term the self-destructive impulse—akin to a child on the beach who builds a beautiful castle and kicks it down. Forty-two years ago, Abraham Zaleznik, a psychoanalyst management scholar at the Harvard Business School, explained that many times, such entrepreneurial leaders as Trump and Musk are driven by an ultimately self-destructive megalomania, rooted in a bad relationship with a parent who disparaged them but is no longer around to be proven wrong. Zaleznik stated, 'In their climb to the top, they have certain fantasies having to do with creating a new world. There is a search for restitution—to remake the world, remake their childhood, remake a relationship with a parent. They fall prey to the Midas theory. Everything they touch will turn to gold, and if it doesn't they go bonkers. I think if we want to understand the entrepreneur we should look at the juvenile delinquent. I think there are a lot of similarities. They both have an under-developed super-ego. And so they don't understand right from wrong.' Trump's 'Liberation Day' has turned into a nightmare for U.S. businesses. The real liberation the U.S. economy needs is a more orderly, strategic approach to tariffs, liberated from Trump's idiosyncratic whims. Jeffrey Sonnenfeld is the Lester Crown Professor in Management Practice and president and founder of the Yale Chief Executive Leadership Institute. Steven Tian is the director of research at the Yale Chief Executive Leadership Institute. Stephen Henriques is a senior research fellow at the Yale Chief Executive Leadership Institute and a former McKinsey & Co. consultant. The opinions expressed in commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune. Read more: Trump's trade and tariffs policies are flawed and contradictory—and the 'Mar-a-Lago accord' is suited for the trash bin Trump tariffs: Stealing from the China playbook—to boost car making in America Tariffs won't make America great again: Export-Import Bank's former chairman and president This story was originally featured on
Yahoo
24-03-2025
- Business
- Yahoo
President Trump's Defense Cuts Degrade National Security
President Donald Trump speaks during a meeting in announcing the F-47 6th generation fighter jet in the Oval Office of the White House on Friday March 21, 2025. US Secretary of Defense Pete Hegseth and General David Allvin attended the meeting. Credit - Demetrius Freeman—TheUnder the guise of government efficiency, the Trump Administration has led America through a systematic degradation of its national security apparatus in just two months. The alarm over such developments was only heightened last week as President Donald Trump's primary campaign donor and Department of Government Efficiency (DOGE) czar Elon Musk was originally scheduled to receive a briefing on top-secret plans in the event of a war with China. In fact, at the Yale CEO Caucus earlier in March, a poll of 100 leading U.S. CEOs found that 76% believe the nation is reaching a tipping point for collective action to challenge Trump over his degradation of national security, while 80% were embarrassed by the threats made towards our longstanding democratic allies and acts to placate our authoritarian adversaries. Today, the Department of Defense is composed of approximately 765,000 civilian employees and 1.3 million active-duty troops, or about 2 million total in headcount. In 1990, the same figures stood at 1 million and 2.1 million, or 3 million total. While the Cold War was winding down in the late 1980s and early 1990s, that does not explain this decline, given the rise in threats and complexities of maintaining defense systems today. In fact, the defense budget in 1990 was 5.6% of GDP. Now, it is only 3.5% of GDP while the risk of global warfare has soared, spiking the highest in 80 years, arguably above that during the Cold War years. Staff reductions by DOGE have triggered an exodus—voluntary and forced—of senior talent across agencies whose key assets are its human capital. Diminished cyber offensive and defensive operations offer adversaries unnecessary relief and expose the U.S. to new threats. Primary sources of soft power and influence have been yielded, leaving a void to be filled by exploitative regimes in the Middle East, Africa, Latin America and other geostrategic regions. The increased politicization of historically apolitical institutions has sown distrust about government and the military among the public and introduced damaging effects on organizational efficacy and worker productivity. The weakening of America's diplomatic, defensive, and developmental capabilities comes as threats abroad continue to escalate. In recent weeks, China has conducted live-fire naval trainings off the coasts of Australia and Vietnam and coordinated another set of provocative sea, air, and land drills against Taiwan. Russian, Chinese, and Iranian forces held their annual joint naval exercises in the Gulf of Oman less than two weeks ago. Reports of cyber-attacks on U.S. and European public and private networks by Russia, China, North Korea, and Iran arrive nearly every week. And China and Russia have only sped up their charm offensives, recently opening a $1.3 billion mega-port in Peru, advancing economic partnerships in the United Arab Emirates and Saudi Arabia, and providing military aid to African leaders. Despite foreign rivals' actions and Trump's promises of 'peace through strength,' DOGE efforts to slash agency headcount have already resulted in a loss of institutional knowledge and specialized skill sets that cannot be replaced. While the Departments of State and Defense may be big and bureaucratic, they also oversee the most advanced networks of diplomacy and defense in the world. A system of networks that has arguably provided the most peaceful and prosperous time in recorded history. Opportunities to improve operations and cut costs always exist in large organizations, public and private, and should be pursued. However, the arbitrary nature of layoffs across agencies, from the Defense and State Departments to the FBI, CIA, and USAID, do not live up to Musk's intellect. In total, based on publicly available data, an estimated 40,000 people, who work hard to secure the nation from bad actors, have been pushed out of their important roles. Here is a brief overview: Approximately 21,000 workers at the Department of Defense have accepted voluntary resignation plans Nearly all of USAID's 14,000 employees have been laid off or placed on leave The Trump Administration is reviewing a list of 3,600 FBI employees, including those involved in the FBI's Jan. 6 investigation and members of the FBI's counterterrorism division, for potential dismissal Virtually the entire staff of Voice of America, about 1,300 workers, were placed on leave About 700 State Department employees, including 450 career diplomats, have handed in resignation papers Roughly 400 jobs at the Department of Homeland Security, including 130 from the Cybersecurity and Infrastructure Security Agency (CISA), have been cut At least 80 workers at the CIA have been let go And many more layoffs are expected. As easy as it may be to become numb to such large quantities of firings, the numbers represent highly skilled non-partisan experts on surveillance, defense technology, foreign languages, distant cultures, influence channels, and priceless relationships with experience in significant roles in their respective agencies. Plus, all this wasted, priceless knowledge to merely reduce, at most, $4.2 billion of salaries (calculated as estimated 40,000 national security jobs cut multiplied by the average salary for federal employees of $106,382) is hardly of consequence to the $7 trillion national budget. The Pentagon's dismissal of the Chairman of the Joint Chiefs of Staff, General C.Q. Brown; Chief of Naval Operations, Admiral Lisa Franchetti; Vice Chief of Staff of the Air Force, General Jim Slife; and top lawyers for the Army, Navy, and Air Force preemptively removes highly decorated and accomplished military leaders, freezes the implementation of their strategic visions, reduces morale throughout the ranks, and introduces additional uncertainty to defense systems during a vulnerable transition in presidential administrations. The disturbing effect of Trump naming presumably more subservient military leaders in their place was showcased during the President's announcement for the next generation of U.S. Air Force fighter jets, which were apparently named the 'F-47' in his honor as the 47th president. In the press briefing, Trump went so far as claiming, 'The generals picked a title, and it's a beautiful number.' If true, the move makes the politicalization of America's military leadership increasingly apparent—ever more concerning after Trump's politicized termination of former Chairman of the Joint Chiefs of Staff Mark Milley's security detail in January. The ouster of nine veteran FBI leaders, including the heads of the Washington and New York field offices, removes respected leaders from their posts and casts doubt across the organization. The broader removal of FBI and CIA officers presents additional resource constraints throughout the elite agencies which have faced staffing and skills shortages for many years. The firing of the 18 Inspectors General, who have continued to show their value by protecting the federal government from fraud, waste, and abuse in the FBI, Navy, Air Force, and Small Business Administration, among others, leaves agencies vulnerable to new sources of foreign and domestic interference. Beyond reductions in headcount, decisions by Trump and his cabinet to cease U.S. Cyber Command's offensive cyber and information operations against Russia and to halt coordinated efforts with the EU to counter Russian espionage are part of the President's strange one-sided overtures towards President Vladimir Putin—despite a recent surge of cyberattacks on the U.S. government. The downsizing of CISA reduces the ability to counter cyber threats from not only Russia but also China, Iran, and North Korea, and the disbanding of the Cyber Safety Review Board delays any attempts to address the espionage attacks from China's Salt Typhoon, which compromised the networks of eight large telecommunications companies last year. Similarly, Trump shelved the small but vital Office of Net Assessment where a dozen military officers plan future war scenarios. The actual price paid by taxpayers for the operation of this office is less than two of the 500 trips to Mar-A-Lago Trump charged the U.S. for in his first term. The collective closure of USAID, Voice of America, and diplomatic outposts will severely weaken U.S. soft power, compounding the negative effects of Trump's 'America First' foreign policy agenda, while China, Russia, Iran, and North Korea expand efforts to weaken U.S. influence and strengthen their own. The politicization of the allegedly 'woke' military, FBI, CIA, NSA, and other security agencies have tarnished the reputation of these apolitical institutions, further eroding the public's confidence and national pride in them and their leaders. Recruiting will become more difficult. Attrition will increase, and continuity in operations will decline. As the five former Defense Secretaries explained in their letter to Congress last month, 'The United States cannot afford to have our military infected by partisan politics and distracted from its core mission of defending the nation.' The Trump Administration has significantly weakened America's national security infrastructure under the false pretense of government efficiency, by reducing staffing at the Departments of Defense and State, FBI, CIA, USAID, and others despite increasing global threats. The exodus of senior talent threatens to impair our defense capabilities and soft power, allowing adversarial regimes to expand their influence. For those of us who dedicated our lives to serving the U.S. military and those of us who worked on other national security fronts, these developments are extremely worrisome. Contact us at letters@
