What should we expect out of Friday’s meeting between U.S. business leaders and President Donald Trump? Trump’s business advisory council, chaired by Blackstone Group L.P.’s (NYSE: BX) Stephen Schwarzman, is populated by such luminaries as International Business Machines Corp. (NYSE: IBM) CEO Ginni Rometty; Jamie Dimon, CEO of JPMorgan Chase & Co. (NYSE: JPM); and Wal-Mart Stores Inc. (NYSE: WMT) CEO Doug McMillon.
Given the sieve-like nature of the Trump administration, the tone and tenor of the discussions at the closed-door meeting should hit the tape about 10 minutes after the meeting ends.
There is plenty to talk about. Trump’s immigration/Muslim ban is widely opposed among tech giants like Alphabet Inc.’s (NASDAQ: GOOGL) Google, Apple Inc. (NASDAQ: AAPL) and Microsoft Corp. (NASDAQ: MSFT) that have for years recruited non-U.S. talent to fill jobs the companies say they can’t find qualified U.S. citizens to fill. Two outspoken critics of the ban have been Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk, who will attend Friday’s meeting, and Uber CEO Travis Kalanick, who resigned from the council on Thursday. Expect more heat than light on this one.
Another divisive issue is the proposed border-adjustment tax that House Speaker Paul Ryan is promoting as a way to pay for promised tax cuts. Put simply, goods made in the United States may be exported with no tax; goods imported into the country would be taxed at some unspecified rate (most often cited as 20%) and that cost would be passed on to consumers. Even if Trump could gin up support for a tariff on imports, the ultimate cost would be borne by end-users. That’s you and me.
U.S. businesses are lining up on opposite sides of the border tax proposal. A group called the American Made Coalition announced its formation on Wednesday “in support of pro-growth tax reform.” Members include General Electric Co. (NYSE: GE) and Boeing Co. (NYSE: BA). It’s not hard to determine which side of the issue the group comes down on:
The Coalition believes the obsolete and biased tax system subsidizing imports of foreign goods must be replaced with one that restores the United States’ competitive advantage in the foreign marketplace.
On the other side is a group called Americans for Affordable Products that lists dozens of companies, from giants like Walgreens Boots Alliance Inc. (NASDAQ: WBA) to small groups like the Montana Tire Dealers, who are opposed to any import taxes:
We oppose any Border Adjustment Tax (BAT) because it will increase the cost of clothing, food, medicine, gas, and other essential items that Americans rely on. Consumers shouldn’t bear the burden of this new tax while some corporations get a tax break. We fight for consumers by protecting their pocketbooks and ensuring access to affordable everyday products.
Don’t expect any resolution on this issue to come from Friday’s meeting either. As the issue is being presented, President Trump will have to decide eventually whether to side with big business interests and Paul Ryan or with the people who voted for him. Expect a longer period of uncertainty with plenty of leaked details so that Trump can get a read on which way the wind is blowing before making a choice.