How CEOs Beat Trump on Tariffs

It took a mere 13 hours for the Trump administration to cave on their reciprocal tariff scheme. President Donald Trump, Commerce Secretary Howard Lutnick, and Trade Advisor Peter Navarro did exactly what they said they would not do—“back off” of the non-negotiable trade measures. More perplexing is that no significant trade concession was gained from a single country during the brief period of “maximum leverage.” But a self-congratulatory tone was adopted after announcing a 90-day pause on the reciprocal tariffs.

While the President may have been able to confront retaliatory tariffs from foreign partners and diffuse public demonstrations against DOGE actions, he was ultimately unable to stand up to the growing chorus of CEOs condemning his administration’s tariff agenda. Under the threat of aggressor trade tactics, U.S. stocks shed more than $6.5 trillion in two days. And more market pain looked likely as corporate quarterly earnings were just beginning to be released, with growth forecasts being revised downwards. Moreover, Treasury yields and the dollar’s value appeared to be breaking with conventional trade norms during similar periods of crisis, fueling rumors of the two assets losing their coveted “safe-haven” status—and threatening the interest rate discounts on U.S. corporate debt associated with that status.

Simply put, CEOs had enough. JP Morgan CEO Jamie Dimon admitted a recession is “a likely outcome” as tariffs were “beyond what people expected.” Delta Airlines CEO Ed Bastian pulled the  company’s financial forecast for the year “given broad economic uncertainty around global trade.” BlackRock CEO Larry Fink told an audience at the Economic Club of New York that most business leaders from his portfolio companies “say we are probably in a recession right now.” These three instances are but a few of the many recent statements of defiance from all corners of the business community, including finance, transportation, housing, autos, technology, and general manufacturing—led by other titans of industry, from Tesla’s Elon Musk to General Motor’s Mary Barra to Alcoa’s Bill Oplinger as well as trade association leaders such as Jay Timmons of the National Association of Manufacturers and Suzanne Clark of the U.S. Chamber of Commerce. 

Last month, in fact, at Yale’s CEO Caucus, 100 top CEOs told us they would begin to speak out against Trump if the stock market fell by approximately 20%. Business executives did exactly that as the markets surpassed or flirted with the threshold. Collectively, they punctured the threats and self-inflicted suffering in a challenge directed towards the president. 

Despite the moderate trade relief, CEOs remain confused and concerned with the continued delays and whiplash reversals by the administration. The uncertainty has stalled business investment and stymied the potential boon in opportunities from deregulation. Many have expressed a loss of confidence in the president’s economic policy agenda. Trump has placed himself in a precarious situation.

In corporate leaders’ minds, the blame rests not only on Trump but also Navarro and Lutnick. Both have lost credibility after reversing course on the negotiability of tariffs. In an interview last week on CNN, Lutnick said, “I don’t think there’s any chance…President Trump’s going to back off his tariffs.” On the same day, Navarro went on air to declare “this [tariff doctrine] is not a negotiation.” The trade advisor then doubled down in an op-ed with the Financial Times. It is Treasury Secretary Scott Bessent who adopted the opposite message to his two colleagues in the internal feud over the White House’s trade strategy. 

Wednesday’s market relief in response to Trump’s Truth Social post indicates the President may have quelled some of the jitters of nervous traders but not those of CEOs. Business leaders might have stopped him from driving the U.S. economy off a cliff, but it remains teetering on the edge. 

The conflicting details from White House Press Secretary Karoline Leavitt, Bessent, and Trump did not provide business leaders enough confidence to end their pause on capital investments or M&A. After more firm details behind the pause emerged, initial excitement tempered. Some analysts even expect the new tariff policy to be just as economically painful. The 10% base tariff was not rescinded. Tariffs on China were ratcheted up to 125% from 104% as punishment for retaliation, despite the European Union approving retaliatory tariffs of their own hours before. The tariff stance on Canada and Mexico were not affected, nor were existing tariffs on the auto, steel, aluminum, lumber, and other sectors rescinded. Tariffs on the pharmaceutical and semiconductor industries are still reportedly under consideration. 

The heightened sense of uncertainty that forced small business confidence to plunge by 50%, labor market conditions to deteriorate, capital spending to stall, and GDP growth forecasts to plummet still remains. Before any reciprocal tariff announcements, 89% of CEOs said at our CEO Caucus in March that they were increasingly concerned the US economy is heading towards a recession, while 69% said the administration would be bad for the economy. Nearly all leaders supported the use of selective tariffs, like most of the American public, but not those that are generalized or reciprocal. And as four-fifths of CEOs reported apologizing for Trump’s behavior to their international counterparts, some of those same longtime foreign trade partners are having exploratory conversations with China to expand commercial ties. 

Perhaps Musk best described the current tariff policy on X amid his public feud with Navarro. Musk called Trump’s trade advisor “dumber than a sack of bricks.” Seems appropriate, but then again, that characterization might be unfair to bricks. 

The trade policy uncertainty continues to present significant challenges for business leaders, disrupting long-term planning, investment decisions, and global supply chain strategies. The recent decision to pause reciprocal tariffs might be a small “win” for leaders. They are hoping the President has learned a lesson here.