Former Treasury Secretary Lawrence H. Summers posted some well-chosen words Saturday about Donald Trump’s bewildering and pointless tariff war, which had been launched earlier that day.
In a string of tweets he called the 25% tariffs Trump proposed on goods from Canada and Mexico “inexplicable and dangerous,” joined the near-unanimous chorus of economists in predicting that the tariffs would raise domestic prices on “automobiles, gasoline, and all kinds of things that people buy,” and noted that the arbitrary imposition of tariffs would lead other countries to view the U.S. as a “bad partner,” which will “undermine our economy, our power and our national security.”
The tariffs, Summers wrote, are “an important test for the business community,” which knows that “this is not a pro-business strategy … I hope business leaders have the courage to say so.”
If only.
Summers’ plea came late, after the tariffs were announced. But with a few notable exceptions, America’s business leaders were silent about the sheer madness of Trump’s launching a trade war without legitimate justification.
In the months, weeks and days before the announcement, they spoke vaguely about how they would navigate tariff barriers affecting their own industries, but little about the broader ramifications. And even the fiercest critics of the tariffs bent a knee to Trump’s ostensible but exaggerated rationale for the tariffs, the flow of fentanyl and undocumented workers coming into the U.S. from Canada and Mexico.
For the most part, the business community’s pushback against tariffs played out via news releases covered largely by the business press, if at all. The impending economic crisis warranted a more direct response in which business leaders tried to seize the stage back from Trump, outlining in ways that ordinary Americans would understand the costs that every American household will shoulder if the tariffs continue.
They didn’t do that.
Business leaders may have calculated that Trump’s breast-beating about imposing higher tariffs was just talk, or part of a negotiating strategy. As it happened, they appear to be right. Monday, hours before the tariffs were to take effect, Trump backed away, agreeing to pause the tariffs for a month, pending negotiations with both cross-border partners.
But Trump’s actions rattled the financial markets, which didn’t fully recover losses sustained while the tariffs appeared to be imminent. Also rattled was the faith of foreign governments in America’s steadfastness, which may not recover as long as Trump is in the White House.
“CEOs have kept their powder dry from public discourse knowing that Trump hates the humiliation of being trapped in a corner and can lash out like a wounded animal,” says Yale business professor Jeffrey A. Sonnenfeld, whose insights into chief executive thinking are unmatched.
Let’s go deeper into the business community’s unsuccessful campaign, such as it was, against the tariffs.
We can start with some encouraging noises. On Saturday, the U.S. Chamber of Commerce called foul on Trump’s citing the Carter-era International Emergency Economic Powers Act as the statute giving him unilateral authority to impose tariffs by citing an “emergency situation” caused by “illegal aliens and drugs” coming from beyond the border.
“The imposition of tariffs under IEEPA is unprecedented, won’t solve these problems, and will only raise prices for American families and upend supply chains, chamber Senior Vice President John Murphy said.
On Jan. 16, in her annual address on the state of American business, chamber CEO Suzanne P. Clark warned that “blanket tariffs would worsen the cost-of-living crisis, forcing Americans to pay even more for daily essentials like groceries, gas, furniture, appliances, and clothing. And retaliation by our trading partners will hit our farmers and manufacturers hard, with ripple effects across the economy.”
The National Assn. of Manufacturers also issued a strongly worded response, noting that “a 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses — employing millions of American workers — will face significant disruptions.”
From there, however, there’s a sharp drop-off in the vigor of comments from American industry about tariffs with the potential to upend the global economy. At General Motors, the American automaker most exposed to the impact of the tariffs, CEO Mary Barra wanly addressed the issue during the company’s fourth-quarter earnings announcement conference call Jan. 28.
Barra noted in response to a question that GM builds trucks in Mexico and Canada, “so we can look at where the international markets are being sourced from. So there’s plays that we can do on that perspective to minimize the impact if there are tariffs either on Canada or Mexico…. We’re doing the planning and have several levers that we can pull.”
That was it; no observations about tariff policy itself or its broader economic implications.
A spokesperson told me Monday that the company had “no new statements … at this time” and referred me to its trade groups, the Alliance for Automotive Innovation and the American Automotive Policy Council.
The council has merely asked that its cars and parts be exempted from any new tariffs without making any observations about the consequences of a tariff war. On Saturday, the alliance observed that “seamless automotive trade in North America accounts for $300 billion in economic value” and added, “We look forward to working with the administration on solutions that achieve the president’s goals and preserve a healthy, competitive auto industry in America.”
I’ve written before that counting on corporate leaders to stand firm against policy threats to American democracy or the U.S. economy is a mug’s game. But these tariffs took direct aim at American businesses, which should have gotten them more stirred up.
The Business Roundtable, an organization of CEOs of top U.S. corporations, was especially mealymouthed. In a statement issued Sunday, it said, “We agree with the President’s goals of securing our borders and stopping the flow of illegal drugs into the country…. Business Roundtable hopes that Mexico, Canada and the U.S. can quickly reach a deal to strengthen security at the border.”
I asked the Roundtable whether it had anything to add, and got a rather snarky response from Michael Steel, its head of communications, that my question “seems a bit OTBE’ed at the moment.”
Steel meant “overtaken by events,” by which he was referring to an announcement Monday that Trump had decided to put Mexican tariffs on hold for a month, based on Mexico’s purported agreement to send 10,000 troops to the border.
As it happens, Mexico had already reached a similar agreement with the Biden administration without Biden’s having had to threaten to trash the global economy. There’s no indication that the 10,000 troops will be additional to the 15,000 troops deployed earlier. Trump is also said to be planning a talk with Canadian Prime Minister Justin Trudeau.
Could American CEOs have headed off the tariffs chaos either by a more focused publicity campaign or more jawboning with Trump? That’s impossible to say, in part because business leaders haven’t been out in front of Trump’s tariff policy in any broadly public way, and because no one can be sure why Trump had decided to impose steep tariffs on America’s most important trading partners without provocation.
More than two dozen CEOs had contacted Trump privately, Sonnenfeld told me, but their efforts to dissuade him plainly didn’t stop him from announcing the tariffs.
The corporate reaction to Trump’s tariff obsession shows that business leaders are still afraid of confronting Trump directly even as his policies threaten to erode their sales and profits, not to mention to undermine the rule of law in the U.S. in ways they will regret.
We know this because even the sternest statements from business organizations embraced Trump’s stated rationale of securing the borders. As a preface to its statement objecting to the tariffs, the Chamber of Commerce said “the President is right to focus on major problems like our broken border and the scourge of fentanyl.”
This isn’t an expression of fact about the border; it’s a shibboleth, designed to communicate that, all things considered, the chamber is still down with Trump’s leadership in general terms.
The truth is that Trump’s rationalizations don’t stand up to scrutiny. Under Biden, enforcement at the Mexican border was sharply stepped up, with 54,000 “encounters” recorded in September 2024, down from 250,000 in December 2023, according to the Migrant Policy Institute. In part this was the result of stronger enforcement by the Mexican government.
On fentanyl, the Centers for Disease Control and Prevention and the Drug Enforcement Administration both documented major victories in stemming the flow of illegal fentanyl into the country and sharply reduced overdose deaths. Drug overdoses peaked at about 114,000 in the year that ended June 2023, were down to less than 90,000 in the year that ended August 2024 and seemed destined to continue falling. Trump has claimed that 300,000 people are dying every year from drugs smuggled from Mexico, but that figure has never been true.
Nor is fentanyl smuggling a significant issue on the Canadian border; in fiscal 2024, U.S. agencies seized 21,000 pounds of fentanyl at the Mexican border, but only 43 pounds at the Canadian border.
All this points to the basic instability of American foreign relations in the Trump regime. Our business leaders need to acknowledge that such a situation won’t be good for anybody, and poses a particular threat to our relations with countries that have been loyal allies of the U.S.
That gives new meaning to the quip once offered by Henry Kissinger, in a different context: “It may be dangerous to be America’s enemy, but to be America’s friend is fatal.”
