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Battered CEOs Meet With Trump in Washington

President Trump meets this morning with the CEOs of major U.S. corporations who have agreed to sit on his Strategic and Policy Forum—a group led by Blackstone CEO Stephen Schwarzman that includes GM’s Mary Barra, J.P. Morgan’s Jamie Dimon, Disney’s Bob Iger, Pepsi’s Indra Nooyi, IBM’s Ginni Rometty, Walmart’s Doug McMillon and more.

Two weeks into his administration, they all must be feeling the cognitive dissonance of battered children.

On the one hand, Trump has shown them more love and attention in two weeks than his predecessor did in eight years. He has put members of their ranks in top jobs—something the Obama team found nearly impossible to do—installing former Exxon CEO Rex Tillerson at State (Tillerson wooed his new department with humility and humor yesterday) and former Goldman Sachs CEO-in-waiting Gary Cohn as head of the National Economic Council. He has promised lush cuts in corporate taxes, which could among other things enable companies to repatriate the $2 trillion in profits they have locked overseas. And he has promised to slash a regulatory burden that has risen significantly over the last eight years. He will begin to follow through on the regulatory promise today, by issuing an order that guts some of the Dodd-Frank rules that banks find most onerous.

Yet on the other hand, the President has bullied many of the CEOs with unprecedented threats of unilateral tariffs on their products. He is axing trade agreements that threaten to disrupt their carefully constructed global supply chains. And in a business world where competition for talent has become increasingly intense, he has created a revolt among many of their most talented employees with a poorly executed immigration ban. It was that last move that caused Uber CEO Travis Kalanick to drop off the advisory council yesterday. Meanwhile, Tesla CEO Elon Musk says he will stay on in order to give the new President his views on the matter.

The potential gains from this convoluted dance—reduced regulation and tax reform—still far outweigh the pain—humiliation, bullying, potential trade battles, unsettled workers, etc. But all are watching warily. The wild ride of the first two weeks has made the downside look more frightening, and the upside—at least on the tax front—harder to achieve.