President Donald Trump may be volatile, controversial and prone to counterproductive fits of spontaneous self-expression. So far, though, the top decision-makers in commerce admit he hasn’t been bad for business.
They’re just not convinced it can last.
As much as they’re exuberant about soaring equities and booming economies, many global executives congregating in Davos, Switzerland are counting the risks that could bring the party to an end. Stocks rose worldwide on Tuesday even as Trump slapped tariffs on solar panels and washing machines that some warn is a harbinger of a wave of protectionism.
“I was much more nervous a year ago,” Gary Pinkus, the managing partner for North America at management consultancy McKinsey & Co., said in an interview at the Alpine resort. Pinkus described the mood at a dinner he’d just hosted for corporate leaders as, “from an economic point of view, just shy of jubilant.”
It wasn’t long before he added a caveat: “Optimism builds slowly, but it ends quickly.”
Business leaders have as many reasons to rejoice as they do to worry. The International Monetary Fund this week predicted global growth will accelerate to the fastest pace in seven years as U.S. tax cuts encourage businesses to invest while, in the same breath, warning governments to be on guard for the next recession.
Temporary Boon?
Executives gathered at Davos also oscillated between optimism and caution. Take the reduction in U.S. corporate taxes to 21 percent from 35 percent that Trump pushed through last month. It’s already prompted companies including Apple Inc. to repatriate overseas cash holdings and increase U.S. investment, even as critics warn the law will exacerbate inequality by delivering most of its benefits to the already-rich.
“There are companies all around the world now looking at U.S., saying this is the place to be in the developed world," said Blackstone Group LP Chief Executive Officer Stephen Schwarzman, who advised Trump on economic policy after his election.
Tidjane Thiam, chief executive of Credit Suisse Group AG, has also noted “a step up in interest” in the U.S., citing Ferrero SpA’s acquisition of Nestle SA’s American chocolate business as an example.
“The tone that I sense here is that it is a bit of the world against the U.S. right now”