Stocks are up 11% or so since Donald Trump won the presidency in November. So CEOs are psyched, right?
Not quite yet, actually. Market moves “are not a business decision, they’re an investor decision,” EY CEO Mark Weinberger tells Yahoo Finance in the video above. “The uncertainty created by some of the big policy proposals probably does cause a pause [in business activity].”
Business leaders undoubtedly like to hear Trump promise tax cuts and deregulation, which would boost profits and strengthen the incentive to invest in the United States. But that’s mostly talk, so far, with no big legislative rollbacks yet underway in Congress, and little more than a one-page tax plan emanating from the White House.
Then there’s the threat of trade wars, which corporate America explicitly dislikes. Trump recently said he was a pen stroke away from pulling out of the North American Free Trade Agreement, dissuaded only by a barrage of phone calls when word of the impending move leaked. He has threatened protective tariffs on many imports and imposed a few targeted restrictions on select products coming into the United States from Canada.
Trump has hosted dozens of CEOs at the White House—Weinberger among them—to hear their ideas about how to boost growth and create more jobs. Weinberger believes business leaders have convinced Trump to hold back on some of his riskier ideas.
“We laid out why a trade war is not really good for business,” Weinberger says. “We need to be able to work with China and with Canada and with Mexico. You’re hearing now, he’s renegotiating NAFTA, he’s not declaring war on China. I think you’re going to hear him say, ‘we need fairer deals,’ not ‘trade is bad.’”
If Trump continues to mellow on trade and converts some of his rhetoric to action, corporate America could press the gas. “There’s no doubt about it – if we have lower rates, a more competitive international [tax] system, we get some infrastructure improvements in this country, and deregulation, you will see more investment here,” Weinberger says. Those are lot of ifs, but Trump’s only been in office a hundred-and-something days. And nobody’s really counting.
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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.