Donald Trump’s proposed tariffs on steel and aluminium imports could undermine or even reverse the economic benefits of recent tax reforms, one of Washington’s largest business lobby groups warned on Tuesday, even as it reported soaring optimism among US chief executives.
The Business Roundtable’s quarterly index of CEO confidence hit its highest levels in February since it launched 15 years ago, as companies responded to the tax cuts and deregulatory measures pushed by the Trump administration. The group’s members now see US GDP growth hitting 2.8 per cent this year, up from their estimate of 2.5 per cent three months ago.
The survey captures a buoyant moment for American businesses, but was conducted before President Donald Trump announced plans for sweeping tariffs on foreign steel and aluminium. These could break the wave of boardroom optimism, the BRT warned.
“[T]he economic progress made by easing regulatory burdens and reforming our tax code faces a looming threat,” said Joshua Bolten, chief executive of the BRT. “By taking measures to restrict international trade, the Trump administration risks undoing this economic progress and harming American workers and businesses who rely on trade to stay competitive in the global marketplace.”
Jamie Dimon, the JPMorgan Chase chief executive who chairs the BRT, told reporters that its members were very concerned protectionist trade measures “will cause more harm than good to the economy”.
The survey was conducted between February 7 and February 26, before Mr Trump’s tariffs announcement and the resignation of Gary Cohn as director of the National Economic Council.
Business confidence has been shaken by the exit of Mr Cohn, the former chief operating officer of Goldman Sachs, and Rex Tillerson, the former ExxonMobil boss who was seen another advocate of free trade in the administration before Mr Trump sacked him as secretary of state on Tuesday.
“All of us have enormous respect for Gary Cohn and I think he’s a loss,” Mr Dimon said. “We know Rex Tillerson well here, too, and we think he’s a hugely competent, capable individual.”
Asked who CEOs would like to see succeed Mr Cohn, Mr Bolten replied: “That’s easy. It’s anybody who supports pro-growth policies and an open international trading system. That’s what we’d like to see as the advice coming in to the president.”
The BRT index, composed of CEOs’ projections for their sales and plans for hiring and capital spending over the coming six months, jumped 21.8 points to 118.6 in the first quarter, its highest since the survey began in late 2002. The previous record had been 113 in 2011, and the historical average for the index is 81.2.
Reflecting the windfalls many companies received from the Tax Cuts and Jobs Act, which Mr Trump signed into law in December, each component of the index also hit a new high. The reading on CEOs’ hiring plans rose 22.8 points to 98.5, the measure of capital investment was up 22.7 points at 115.4 and CEOs’ expectations for sales increased 19.9 points to 141.9.
Mr Bolten said uncertainty about trade policy — including the outlook for the North American Free Trade Agreement — was a “possible major headwind”, however, and called on the White House to clarify its tariff plans as soon as possible. “Predictability and consistency is absolutely crucial for all of our CEOs’ planning,” he said.
Concerns about the administration’s trade policy extend beyond America’s boardrooms. A survey of 43 conservative and progressive economists by the University of Chicago Booth School reported this week that not one of them thought the proposed tariffs would boost Americans’ welfare.
The BRT’s members employ more than 16m people and represent companies with more than $7tn in annual revenues which account for almost 30 per cent of total US stock market capitalisation.