Jeffrey Sonnenfeld,founder of the Yale Chief Executive Leadership Institute, and Stephen Henriques write:

The Yale Chief Executive Leadership Institute’s CEO forum gathers top political leaders with Fortune 500 CEOs for a Chatham House rules discussion where direct quotes are off the record. In Washington DC this week at the 155th gathering, as clouds swirled around the Capitol building just steps away, senators from both parties and some top Trump administration officials joined us. They had to face down the near unanimous verdict from over 100 top business leaders, representing some of the world’s largest companies and most iconic brands: Trump’s policies aren’t working. These opinions were all about business results, by the way: the reasoning was independent of personal politics or industry sector, it always came back to the bottom line.

Business leaders at our forum worry that Trump is undermining an economic system that took decades to build and has long benefited the U.S. more than any other country, under both Republican and Democratic administrations, all for short-term gains. They see what’s happening as a hollowing out of U.S. economic foundations and institutions. In this free-to-speak environment (a loaded topic these days), they said that while they approve of bringing manufacturing back to the U.S. and bolstering economic and national security, they fear for America’s international standing amid the degradation of national security at the FBI, the CIA, and the Pentagon.

This widespread sentiment is directly counter to the heavily trumpeted “Dear Leader” tributes of just a handful of tech titans, who are decidedly not representative of the leadership class.

Two-thirds of the CEOs surveyed at our event said that U.S. tariffs have been harmful to their businesses. They estimate that 80% of the tariffs have been shared equally between domestic firms and U.S. consumers, with the remainder shouldered by foreign counterparts. Businesses have attempted to limit the cost of tariffs from being passed on by rerouting supply chains, reworking operations, instituting hiring pauses, or administering large-scale layoffs. But they have limited options left as inventories built up before the tariffs took effect continue to be depleted.

One CEO of a major U.S. manufacturing company explained to the group: “If the U.S. government wants to help protect certain industries, they need to help those industries be successful. It is not just putting a bunch of tariffs in place and assuming those industries are going to get moved to the U.S. There have to be incentives … Consumers want products to be low-cost … power tools, hand tools, clothing, sneakers … Does it really make sense to be manufacturing all that in the United States? I do not believe it does. I believe there are certain industries where it does make sense … but it is not realistic to expect every industry in the world to be manufacturing products in the U.S. for the U.S.”

The leaders of Gap, Ford, Stanley Black & Decker, Nike, Conagra, Procter & Gamble, Home Depot, Best Buy, Macy’s, Target, and Walmart are but a few of the many who have outlined similar dilemmas in recent public commentary. This is the perfect opportunity for the Business Roundtable to advocate for its members in a forceful, direct challenge to the administration, but it has been perplexingly muffled. As expected, inflation has increased, reversing the downward trend that Trump inherited from the Biden administration, and the labor market continues to weaken.

Unfortunately, rebuilding at home does not seem to be the solution Trump had hoped for. Fewer than half of the CEOs reported having increased investments in domestic manufacturing and other infrastructure since “Liberation Day,” and even fewer said they expected the results of their capital investments to be material. [Continue reading…]