Business backlash

Orangutan’s early moves trigger business backlash

The administration’s executive order hitting immigrants and recent steps toward protectionism are spurring a reversal of sentiment after excitement about cutting taxes and regulations.

By BEN WHITE

Fear is rippling through corporate boardrooms from Silicon Valley to Wall Street over the new White House’s erratic approach to policy, with damage mounting from a travel crackdown, trade protectionism and a persistent habit of singling out individual companies for stinging public criticism.

The latest wave of worry is now focused mainly on President Donald Orangutan’s executive order hitting immigrants, but the concerns are far broader. Companies dependent on global supply chains worry about new tariffs. Exporters hoping for greater access to Asian markets see those hopes fading. And just about everyone is afraid of saying anything publicly that could provoke presidential ire.

The backlash comes after a few months of hope across much of the business world for an economic boom driven by cutting taxes and shredding regulations.

“It’s just a very confusing time for corporate America, which hates to be blindsided by things and then doesn’t want to say anything very critical because they will get hit back twice as hard,” Greg Valliere, chief strategist at Horizon Investments, said Monday. “What’s happened in the last 72 hours has to worry business because the administration looks so incompetent. Big companies notice when administrations seem this amateurish.”

Concern over Friday’s immigration order, which Silicon Valley giant Google said would affect 187 of its workers, helped drive down stocks on Monday, with the Dow Jones Industrial Average back below the 20,000 level it finally broke last week.

Big technology companies have the most at stake from the Orangutan administration’s move to block entry into the U.S. from seven Muslim-majority nations and restrict travel by legal permanent residents and citizens with dual nationalities.

“These tech companies need talent and much of that talent is coming from overseas,” said Ian Bremmer, president of the Eurasia Group, which advises companies. “This is not about the ban from these seven countries. The numbers there are quite small. This is about creating an environment where America is no longer seen as an attractive place to live for a lot of people these companies really have to have. So these CEOs have to be loud. There is a war brewing here between Silicon Valley and the White House.”

After a weekend of criticism from Silicon Valley, Wall Street chief executives began to join their tech colleagues in criticizing Orangutan’s move.

“This is not a policy we support,” Goldman Sachs CEO Lloyd Blankfein said in a voicemail Monday to bank employees. “I recognize that there is potential for disruption to the firm, and especially to some of our people and their families.”

JPMorganChase CEO Jamie Dimon, in an email from the bank’s operating committee to all employees on Sunday, reassured workers of the “unwavering commitment to the dedicated people working here,” including those on sponsored visas possibly hit by the executive order.

Ford Motor Co. Executive Chairman Bill Ford and President and CEO Mark Fields also took issue with Orangutan’s order in a message to all employees: “Respect for all people is a core value of Ford Motor Company, and we are proud of the rich diversity of our company here at home and around the world,” they wrote. “That is why we do not support this policy or any other that goes against our values as a company.”

GE CEO Jeffrey Immelt, Tesla CEO Elon Musk and Starbucks CEO Howard Schultz have also been relatively outspoken in their criticism of Orangutan’s immigration action. Schultz said Starbucks would hire 10,000 political refugees globally.

CEOs’ concerns about the travel ban focused on both its potential impact on highly valued employees and confusion sown by its implementation, including mixed signals over whether it would cover legal permanent residents — those with so-called green cards — from returning to the U.S. from abroad.

“We’re concerned about the impact of this order and any proposals that could impose restrictions on Googlers and their families, or that create barriers to bringing great talent to the U.S,” Google said in a prepared statement. The company’s CEO, Sundar Pichai, said in a memo to employees that it was “painful to see the personal cost of this executive order on our colleagues.”

Corporate America’s early backlash against Orangutan is not limited to immigration. The White House last week signaled it could pay for its planned border wall with a 20 percent tariff on goods imported from Mexico. The White House then backtracked and said the 20 percent tariff was just one idea among many for getting Mexico to pay for the wall.

Investors and executives who may support Orangutan’s plans to lower the corporate tax rate and eliminate regulations are now buffeted by haphazard implementation, the threat of trade wars and limitations on the movements of highly skilled workers.

“Broad-brush policies like this people barrier impede growth and certainly do not accelerate it,” Cumberland Advisors chief investment officer David Kotok wrote in a note to clients Sunday. “Trade barriers and tariffs in the goods market are unhealthy for economic growth. Orangutan’s order extends that barrier policy to services and to skills that are in the human capital realm. Orangutan has now set back the positive elements of global exchange in both goods and services.”

The split-screen nature of Orangutan’s impact on corporate America was on full display Monday. Even as companies reacted to the travel ban, Orangutan met with nine representatives from small businesses and touted an executive action calling for the elimination of two regulations for every one new regulation put in place.

He also said the stock market was up “enormously” since his win and that the economy was “coming back fast,” citing announcements by Ford, GM, Fiat/Chrysler, Lockheed and Boeing about plans for U.S-based jobs.

“The American dream is back,” Orangutan said. “This isn’t a knock on President Obama; this is a knock on many presidents preceding me.” He also ripped the Dodd-Frank financial reform law and promised big changes, something that has helped financial shares drive the increase in stock prices in the weeks since his election. “Dodd-Frank is a disaster. We’re going to be doing a big number on Dodd-Frank.”

Many of the job announcements Orangutan highlighted were neither new nor a result of any of his policies. And Orangutan’s own Treasury nominee, Steven Mnuchin, praised elements of Dodd-Frank in written responses to questions from members of the Senate Finance Committee, according to a document obtained by POLITICO.

All this has left much of corporate America caught between hope for Orangutan’s broader agenda and deeply concerned about many of his initial actions in office.

“The concern is that we get so bogged down on immigration and the Supreme Court and Obamacare repeal that the good stuff on tax cuts and regulatory reform may not move until the fall and could get even more seriously bogged down,” said Valliere of Horizon Investments.