How CEOs should deal with Trump—even if it means ‘vaporware’ announcements

I was curious, then, what advice Johnson might have now for Fortune 500 business leaders dealing with the Trump administration’s prohibitive and volatile tariffs today. Surprisingly, Johnson was quite direct about what he thinks CEOs need to do now.

“Trump likes deals. There’s room for all kinds of deals,” he told me. “Go make a deal with someone in the administration. Make a big announcement in the US, with job creation—which may or may not materialize—and in return you ask for temporary dispensation, to keep the business alive and justify building in the US.” 

Michigan is a good place to start, he advised. “Or other industrial swing states such as Wisconsin, and Pennsylvania, and perhaps Ohio, Indiana, and Minnesota. It’s not rocket science, either.” 

It doesn’t take a Nobel winner to predict that a lot of investment announcements will eventually turn out to be “vaporware” as Johnson puts it. The economics of Made in USA will prove to be impossible, starting with a mismatch in salaries (“Either you pay American workers $3 a day, which they’re not going to do, or the iPhone will cost you many multiples of what it costs now”). 

But with few alternative options, Johnson sees the realpolitik of investment-announcements-for-special-deals as the best strategy for business, especially for car makers and, to a lesser degree, high-profile electronics companies, such as Apple.

The companies that will eventually return to the US, Johnson said, are likely to do so in a highly automated way, as opposed to doing so with a lot of job creation.

And even so, in some sectors, such as textiles, toys, or other lower-end manufacturing, “even with the best intentions, it will be impossible” to manufacture in the US, Johnson said. For companies in those sectors, bonding together in trade associations and asking for dispensations would be the most viable alternative. 

Finally, companies across sectors would do well to remind the government they need the rule of law to thrive, Johnson advised. “You don’t want to be the squeaky wheel, but [companies] need to be serious about this.” — Peter Vanham

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Nvidia drops 7% after China export ban. In a securities filing, the chipmaker said it would take a $5.5 billion charge due to the new restriction. Whether this will incentivize the company to build fabrication centers in the U.S. is far from certain, however. 

China wants respect. Beijing is willing to negotiate a trade deal if the Trump administration can rein in its “ignorant and disrespectful” remarks, according to Bloomberg.

China asks airlines to halt Boeing orders. Bank of America’s aerospace and defense analyst Ronald Epstein described China’s move as “unsustainable” and argued that “the Trump Administration can’t ignore Boeing” in a note on Tuesday. Boeing is the biggest exporter in the U.S. and about two-thirds of its orders are international.

United Airlines sees weaker U.S. environment. The company provided “bimodal” expectations during the company’s earnings call on Tuesday based on two potential situations: “Either the U.S. economy will remain weaker but stable, or the U.S. may enter into a recession.” The airline predicts that the former would lead to a full year EPS of $11.50 to $13.50 while the latter would lead to a full year adjusted diluted EPS of $7 to $9.

Yellen: America will be lucky to avoid a recession. The former Federal Reserve chair and secretary of the U.S. Treasury called President Trump’s tariffs “misguided” and “unclear.” 

Federal judge threatens Trump Administration with contempt of court. The judge made the remarks in a hearing in the case of Kilmar Armando Ábrego García case, who was deported by accident to El Salvador. In the event that the White House triggers a constitutional crisis by refusing to obey court orders, the judiciary has options, legal experts say.

Foreign prisons for Americans? “The White House is ‘looking into’ the legality of sending U.S. citizens to prisons in El Salvador, Press Secretary Karoline Leavitt said during a briefing Tuesday,” Axios reports.

Musk’s “harem”: This WSJ longread on Elon Musk’s children and their mothers is a must-read. Musk has at least 14 children but “multiple sources close to the tech entrepreneur said they believe the true number of Musk’s children is much higher than publicly known.”

The markets

U.S. stocks fell last night in a mixed day of trading. Asia-Pacific markets fell on Wednesday after the U.S. barred Nvidia from shipping its H20 AI chip to China. Europe followed suit, with its major indexes trending down in morning trading.

Here’s a snapshot of the action:

• The S&P 500 closed down 0.17% last night. The index is down 8.25% YTD.
• S&P futures were trading down 0.68% this morning, pre-opening bell.
• Hong Kong’s Hang Seng closed down 1.9%.
• Taiwan’s TAIEX index dropped by 2%.
• Japan’s Nikkei 225 dropped by 1%.
• South Korea’s KOSPI fell by 1.2%.
• The Stoxx Europe 600 was down 0.9% in early trading.
• The UK’s FTSE 100 was down 0.5% this morning.

From the analysts 

• Bank of America on airline cuts: Frontier Airlines’ “June/July/August capacity cut by an average of nearly -13% points. 2Q25 schedules are now down -2.6%, in line with our down -3% forecast. … Air Canada continued to cut transborder capacity with 150bps of growth taken out in each of June, July, and August. Air Canada’s transborder capacity is down approximately -9% in April and May and down -7.5% in June and July,” per Andrew Didora.
• Bank of America’s fund manager survey: “Net 82% of respondents say global economy to weaken (30-year high), 42% say recession likely, inflation expectations highest since Jun'21, probability of ‘hard’ landing surges to 49% (vs 37% ‘soft,’ 3% ‘no’ landing); 41% of investors predict 3 or more Fed cuts on sharp deterioration of ‘liquidity conditions,’” per Michael Hartnett et al.
• WARC on adspend: “Ad spend against news content is in decline across channels. WARC forecasts newsbrand ad spend to fall to $32.3bn this year - a 33.1% fall since 2019. Despite high audience interest, serious news stories are frequently unmonetised due to blunt keyword blocklists deployed by brands concerned by reputational risk,” per its latest trend report.
• Goldman Sachs on investors exiting U.S. trades: “During the large 'risk off' shift across assets before the rebound on Wednesday last week, the S&P 500, U.S. 10-year bonds and the Dollar sold off together. Such episodes have been rare since the Great Moderation with only 2 short episodes since 2000 – being more common in the 1970s stagflation period and the 1980s,” per Christian Mueller-Glissmann et al.

Around the watercooler

Trump’s Nvidia deal lays bare the contradictions in America’s AI policy by Sharon Goldman

LVMH says Sephora sales are slowing down in the U.S. because Amazon is ‘very aggressive’ in lowering prices ‘and we try to avoid this technique’ by Dave Smith

Trump tariffs could prove nearly as harmful to U.S. auto market as Lehman collapse and COVID outbreak, warn S&P forecasters by Christiaan Hetzner

CEO at $40 billion contractor raked in millions last year—plus perks like private jet trips and social club fees by Alena Botros

Mark Zuckerberg suggested wiping everyone’s Facebook friends and making users start again to boost the platform’s relevance by Beatrice Nolan