Liz’s view
“Oh sh*t,” Restoration Hardware CEO Gary Friedman said upon learning that his shares were down 30% after the White House made its Liberation Day splash. “I just looked at the screen.”
His comments, on a live earnings call with stock analysts, captured the feeling in the business world, which was shocked by the arrival of tariffs that President Donald Trump has talked nonstop about for more than a year.
Flashback to January, when executives were bankrolling inauguration parades, literally hugging flags, and shouting into the nearest microphone what a bright moment it was for America. It wasn’t just their MAGA conversion that struck me, but how unshackled they felt expressing it. “It’s fascinating,” I wrote at the time, “to watch everyone say the quiet part out loud.”
Fast-forward three months and it’s now the loud part, whispered despondently. This is not going well, murmur CEOs with thousand-yard stares, as if what’s happening now was some sort of edge case that couldn’t have been predicted.
Coming into his second term, the business community believed that Trump cared enough about the stock market to tone down his more aggressive policies. When he backed off criticisms of Federal Reserve Chair Jerome Powell, which had rattled investors, executives took it as confirmation of what they badly wanted to be true.
The writing was on the wall, though, in Trump’s tepid response to the DeepSeek freakout. It should have been a political gimme — bashing China for copycat tech practices that wiped out trillions of dollars of US stock-market value — but instead the president used it as a chance to make the case for American self-sufficiency. “We need to be laser focused on competing,” he said.
In his first term, Trump often mistook the stock market for the economy in ways that drove the business community crazy. He has now corrected that error at the worst possible moment. A rising stock market doesn’t necessarily translate into broader economic growth. The gains are mostly on paper and mostly flow to people who are already rich, and much depends on whether companies that tap higher prices for cash do productive things with it. But a falling one can bring on a recession in a hurry — nine of the 14 bear markets since World War II have been followed by a shrinking economy.
More troubling for business leaders is that the basic barter system that has driven the Trump administration’s policies so far seems to have broken down. Israel preemptively canceled all its tariffs on US goods earlier this week, hoping to be spared. It wasn’t. India Prime Minister Narendra Modi’s cozy relationship with Trump — remember the “Howdy, Modi!” rally? — had no effect.
The lesson from Trump’s first 73 days was that everything can be bought. Paul Weiss’ price for peace was $40 million. ABC News’ was $15 million.
But that naked commercialism may be cracking, too. Chevron adopted Trump’s “Gulf of America” language, but got no obvious help with its Venezuelan drilling concession mess. Pfizer’s decision to patronize Mar-a-Lago, and its CEO’s Biden-bashing, haven’t dented Trump’s enthusiasm for gutting health care research or reopening vaccine probes.
Notable
- CEOs were blinded by the lesson they took from Trump’s first term to take him “seriously, but not literally,” writes The Dispatch’s Nick Catoggio. They dismissed his increasingly specific tariff talk as “protectionist boob bait for the bubbas designed to get him reelected, not a serious trade proposal...Oops.”
- Politico’s diagnosis of the problem is, essentially, that Wall Street looked at Scott Bessent and saw Steven Mnuchin. No government official in recent memory has surprised the business community more to the upside than Trump’s first Treasury Secretary, who steered the economy through the pandemic with a mix of textbook market moves and a surprising ability to manage up. The corporate world saw Bessent, a longtime trader, as one of their own, but “he definitely has not played the role to date that the markets had expected,” Sarah Bianchi, a senior managing director at investment bank advisory firm Evercore ISI, told the magazine.
- “It’s too bad nobody on Wall Street can afford to buy a newspaper subscription,” wrote Jeff Stein, the Washington Post’s chief economics correspondent.