Trump’s Economic Messaging Spooks CEOs. Why Are They Keeping Quiet?

Summary

WSJ What’s News: Trump’s Economic Messaging Spooks CEOs. Why Are They Keeping Quiet?
Release Date: March 12, 2025

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1. US Inflation Data and Federal Reserve Implications

The episode opens with a discussion on the latest Consumer Price Index (CPI) figures. In February, US inflation rose by 2.8% year-over-year, which is a decrease from January's 3.0% and slightly below economists' expectations. Core inflation, excluding volatile food and energy prices, increased by 3.1%, marking the lowest year-over-year rise since 2021.

Key Insights:

• Justin LeHart, WSJ Economics Reporter, explains that the recent inflation data has not yet been significantly impacted by President Trump's tariffs, as most were only implemented in the current month.

  "Not yet. Most of the tariffs didn't go into effect until this month." [01:38]

• Impact on the Federal Reserve: While the headline inflation numbers may appear encouraging, LeHart cautions that the decline is largely due to a drop in airline prices, indicating underlying complexities.

  "It's comforting to see sort of that headline, but once you dig in, it's not as happy as you might have thought." [02:01]

2. Retaliatory Tariffs from Canada and the European Union

The conversation shifts to the international trade tensions sparked by the Trump administration's tariffs on steel and aluminum. In retaliation, both Canada and the EU have announced additional tariffs on US goods valued at over $20.5 billion.

Key Details:

• Canada targets approximately $9 billion in US steel products and $2 billion in aluminum, alongside other imports like computers and sports equipment.
• European Union plans to impose 50% levies on goods such as American whiskey, motorcycles, motorboats, cranberries, soybeans, and various agricultural exports from Louisiana.

Reporter Kim McCrail provides an in-depth analysis of the EU's strategy:

"The EU has really emphasized the idea that if there was any way of coming to a deal with the US to avert the steel and aluminum tariffs, they could not impose these retaliatory tariffs or they could take them away later on." [04:20]

3. Market Reactions and European Central Bank Commentary

US stock markets experienced volatility in response to the trade tensions and the recent inflation report. By the end of the day, the S&P 500 increased by about 0.5%, the Nasdaq rose approximately 1.2%, while the Dow Jones Industrial Average fell by 0.2%.

Christine Lagarde, President of the European Central Bank (ECB), addressed the heightened uncertainty in global markets:

"Because our expectations have indeed been swept aside in the last few years... the level of uncertainty we are facing is exceptionally high." [06:03]

Her remarks underscore the impact of the Trump administration's policies on international economic stability and alliances.

4. CEOs' Concerns with Trump's Economic Messaging

A significant portion of the episode delves into the apprehensions among US CEOs regarding President Trump's inconsistent economic messaging, particularly concerning tariffs. While privately, business leaders are reaching out to the White House for clarity, they remain publicly silent.

Insights from Brian Schwartz, White House Economic Policy Reporter:

• CEOs are flooding the White House with concerns about the potential negative impacts of tariffs on their industries and consumers.

  "They are trying to really be very clear that if these tariffs are put in place, they will, in fact hurt their industries, they will, in fact, potentially be a detriment to consumers because prices... will go up." [07:48]

• Historically, direct appeals to remove tariffs have been ineffective, leading CEOs to adopt a more cautious approach in their communications.

  "They tried these campaigns and they really didn't do anything. So now it appears that... they're trying to do this this way in their meetings." [08:32]

Comments from Chip Cutter, WSJ Management Reporter:

• The reluctance of CEOs to voice their concerns publicly stems from fear of retaliation and the precarious business environment under the current administration.

  "They're scared. They're worried they're going to be targeted... They really just want to be very careful in this moment..." [10:22]

• A survey highlighted that a significant number of CEOs would only speak out if the stock market experienced a substantial decline (44% cited a 20% drop, 22% a 30% drop).

  "CEOs are saying the stock market would have to fall by a lot for them to really say anything." [11:35]

• Unlike the first Trump administration, where CEOs were more vocal, the current administration sees a more subdued response from the business community.

  "Unlike the first Trump administration, when a number of CEOs were very vocal, we're just not seeing that this time." [11:35]

Conclusion

The episode highlights the intricate dance between economic policies, international trade relations, and the business community's responses. While inflation data provides a mixed picture, the looming tariffs from major trading partners and the ensuing uncertainty jeopardize market stability and business confidence. CEOs are grappling with how to navigate these turbulent waters, balancing their private concerns with the potential repercussions of public dissent.

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Notable Quotes:

• Justin LeHart:

  "Not yet. Most of the tariffs didn't go into effect until this month." [01:38]

• Kim McCrail:

  "The EU has really emphasized the idea that if there was any way of coming to a deal with the US to avert the steel and aluminum tariffs..." [04:20]

• Christine Lagarde:

  "The level of uncertainty we are facing is exceptionally high." [06:03]

• Brian Schwartz:

  "They are trying to really be very clear that if these tariffs are put in place, they will, in fact hurt their industries..." [07:48]

• Chip Cutter:

  "They're scared. They're worried they're going to be targeted..." [10:22]
  "CEOs are saying the stock market would have to fall by a lot for them to really say anything." [11:35]

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This summary encapsulates the key discussions from the podcast episode, providing a comprehensive overview for listeners and non-listeners alike. The inclusion of direct quotes with timestamps offers additional context and depth to the highlighted topics.

Transcript

[Alex Osoloff]

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[Alex Osoloff]

US inflation rose less than expected in February, but tariffs are still looming. Plus, Canada and the EU impose retaliatory tariffs and some may hit the US where it hurts. And Trump's economic messaging is spooking CEOs, but in public they're keeping their opinions to themselves.

[Chip Cutter]

CEOs are saying the stock market would have to fall by a lot for them to really say anything. And there was still a group of CEOs in those respondents who said they didn't feel like there was any sort of room for them to speak out.

[Alex Osoloff]

Right now it's Wednesday, March 12th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. New data from the Labor Department show that consumer prices were up 2.8% in February versus a year earlier. That's lower than the January gain of 3% and slightly lower than economists expectations. For more on these numbers, I'm joined by WSJ Economics, Justin LeHart. Okay, Justin, we've been hearing so much about the economic impact of Trump's tariffs. Are they affecting these numbers?

[Justin LeHart]

Not yet. Most of the tariffs didn't go into effect until this month. We had some new ones out today, steel and aluminum, so obviously those aren't affecting anything. So it's sort of a wait and see when it comes to that.

[Alex Osoloff]

Core inflation, which excludes food and energy prices, rose 3.1% in February. That's the lowest year over year reading since 2021. What does this mean for the Fed?

[Justin LeHart]

Core inflation is sort of a measure of the trend of inflation. So the good news is that did cool the Fed actually follows a different measure of inflation from the Commerce Department. And there was sort of some bad news in the number today. A lot of the decline that year over year core reading was due to a drop in airline prices. So the expectations on the Fed, they're not going to be cutting until June, investors don't think. And the danger is they may not even cut, then it really depends on how the data progresses in the months ahead, both for inflation and then for the economy at large. It's comforting to see sort of that headline, but once you dig in, it's not as happy as you might have thought.

[Alex Osoloff]

That was Economics reporter Justin lehart. Thank you, Justin.

[Justin LeHart]

Thanks.

[Alex Osoloff]

Foreign retaliated against the Trump administration's tariffs on steel and aluminum, saying it would impose an additional levy on more than 20 and a half billion dollars in goods imported from the U.S. canada's Finance Minister, Dominic LeBlanc said that the tariffs will target U.S. steel products worth about $9 billion, aluminum products worth $2 billion, and other U.S. imports, including computers and sports equipment. Meanwhile, as we mentioned in this morning's show, the European Union plans to impose retaliatory tariffs on a range of American goods. In the Oval Office earlier today, President Trump said that, quote, of course he would respond to the EU tariffs. The European tariffs, which include 50% levies on goods like American whiskey, motorcycles and motorboats, are in response to U.S. steel and aluminum tariffs that took effect overnight. Our correspondent Kim McCrail joins me now from Brussels. So, Kim, break it down for us. How exactly would these tariffs work?

[Kim McCrail]

The tariffs that they've talked about would basically come into effect in two sets. The first set would come April 1st and the next would come in mid April. Worth flagging that for all of this. The EU has really emphasized the idea that if there was any way of coming to a deal with the US to avert the steel and aluminum tariffs that the US Imposed, they could not impose these retaliatory tariffs or they could take them away later on.

[Alex Osoloff]

I mentioned a couple of the goods that are up for discussion here, but are there any others that jumped out at you from the list?

[Kim McCrail]

The EU has tried in producing this list to come up with products that will have a maximum influence and potentially maximum pain for the United States while minimizing the impact and the pain for Europeans. So a lot of them focus on, in some cases Republican states, in some cases products that they think that Europeans can find elsewhere from other countries. You mentioned whiskey, motorcycles, motorboats. We've got cranberries, garden umbrellas, tablecloths, handkerchiefs, soybeans, which is on the list of potential tariffs. They're also a major agricultural export to the EU from Louisiana, which also happens to be the home state of House Speaker Mike Johnson. You can see a little bit of an attempt by the EU to make some deliberate choices there.

[Alex Osoloff]

That was reporter Kim McCrail. Thank you, Kim.

[Kim McCrail]

Thank you.

[Alex Osoloff]

U.S. stocks fluctuated wildly as investors weighed the latest trade skirmish with Canada and the European Union and the solid inflation report. Major US indexes ended the day mixed. The S&P 500 was up about half a percent and the Nasdaq rose roughly 1.2%, while the Dow fell about 0.2%. European Central Bank President Christine Lagarde said earlier today that the bank is confronting new levels of uncertainty. In a speech made at an annual conference after the EU announced retaliatory tariffs, Lagarde made it clear that much of that new volatility was traceable to President Trump's administration, though she didn't name him directly.

[Christine Lagarde]

Because our expectations have indeed been swept aside in the last few years, let alone the last few weeks, established certainties about the international order have been upended. Some alliances have become strained, while others have drawn closer. We have seen political decisions that would have been just unthinkable a few years ago, a few months ago, a few weeks ago, just to see them overturned the following day. So the level of uncertainty we are facing is exceptionally high.

[Alex Osoloff]

Coming up, why worried executives keep calling the White House. That's after the break.

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[Alex Osoloff]

President Trump's stop and start trade policy has rattled some of his allies. It's also triggered a flood of calls from business executives pleading with advisors for clarity on the president's strategy. White House economic policy reporter Brian Schwartz joins me now with more. So, Brian, walk me through this. An executive is worried and calls a friend in the White House like Chief of Staff Susie Wiles. What happens next?

[Brian Schwartz]

Well, once word gets out the door that these tariffs are going to be coming down on these countries, Canada, Mexico, China, European Union, you name it, People like Susie Wiles start to receive a flood of phone calls from CEOs and major business leaders with concerns about these policies. The idea is that they're not exactly telling her, listen, we think that they should be completely removed, right? But they are trying to really be very clear that if these tariffs are put in place, they will, in fact hurt their industries, they will in fact, potentially be a detriment to consumers because prices in a lot of these CEOs minds will go up.

[Alex Osoloff]

Why are they not appealing directly to take off the tariffs?

[Brian Schwartz]

There has been historically really not great results from doing that with the president. And the CEOs learned from this in the first time around, back to the 2016 through 2020 years with Trump, when he first started putting on tariffs as a really core part of his economic policy. They tried these campaigns and they really didn't do anything. So now it appears that because that failed the first time, they're trying to do this this way in their meetings.

[Alex Osoloff]

Does this new approach work?

[Brian Schwartz]

We have a scene from a recent meeting that took place between a variety of tech CEOs, HP, CEO, IBM CEO, you name it. And they were sitting down with President Trump, Elon Musk, and Howard Lutnick, Commerce Secretary. Their overall point is that, listen, we're trying to invest more in the United States, but many of our parts for our products come from abroad. So it's very, very difficult for these companies to shift immediately out of these markets because that just historically has been where, frankly, they've been able to build the pieces necessary for their products. These are major forces in the United States economy, major forces in the business sector. And they're trying to have a say here. And the President's response to them has always been, fine, you don't wanna get impacted by the tariffs. You need to start making more of your goods in the United States. And that usually is the end of the conversation.

[Alex Osoloff]

That was White House economic policy reporter Brian Schwartz. Thank you, Brian.

[Brian Schwartz]

Thank you.

[Alex Osoloff]

Okay, so as we just heard, CEOs are privately concerned about the administration's mixed messaging on tariffs, and they're reaching out to White House. But why are business leaders not making their views more open? WSJ management reporter Chip Cutter joins us to talk about it. Chip, there seems to be kind of a disconnect between what CEOs are saying in public and what they're saying in private. Why are they not more vocal?

[Chip Cutter]

They're scared. They're worried they're going to be targeted. They're worried their businesses are going to suffer. They really just want to be very careful in this moment in terms of how they interact with the Trump administration. So you have a number of CEOs in private really just expressing so much frustration over tariff policies, over national security issues, whatever it might be. But then in public, CEOs oftentimes say something else or don't say anything at all.

[Alex Osoloff]

What Is it that they're worried about? Exactly.

[Chip Cutter]

They just feel like there's very limited upside right now and actually speaking out and there's a lot of downside. So when you have these forums of executives, what's interesting is many feel like they can be a little more comfortable and they can share with their peers. I was at a meeting of the Yale CEO Caucus and there it was interesting. You know, you had frustration there with CEOs just saying that they wanted more certainty. They felt like this was an environment that was really tough for them to do business in. But then later in the day, when President Trump appeared in front of the Business Roundtable, the environment was a little more polite. There wasn't as much pushing back. According to those familiar with the meeting, people were mostly just asking questions. But it wasn't necessarily a contentious meeting.

[Alex Osoloff]

Do we have a sense of what it would take for these CEOs to become more vocal and speak out about what they think privately?

[Chip Cutter]

Well, so it's interesting. There was a survey question at the Shiel meeting and the people there in the audience, the CEOs were asked how much the stock market would need to decline for them to speak out. Collectively, 44% of those in the room said it would have to fall 20%. Another 22% of people said the stocks would need to fall 30% before they take a stand. Put that all together. CEOs are saying the stock market would have to fall by a lot for them to really say anything. There was still a group of CEOs in those respondents who said they didn't feel like there was any room for them to speak out right now. We'll see what happens here. It's the early days of this administration still, and I think a lot of companies are trying to figure out how to navigate this. But unlike the first Trump administration, when a number of CEOs were very vocal, we're just not seeing that this time.

[Alex Osoloff]

That was WSJ management reporter Chip Cutter. Thanks, Chip.

[Chip Cutter]

Thanks for having me.

[Alex Osoloff]

Congress is working on a budget and cuts to Medicaid are on the table. The program is mainly for low income Americans, but deep cuts could affect state budgets and health care more broadly. What questions do you have? Send a voice memo to wnpodsj.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show. And that's what's news for this Wednesday afternoon. Christine Lagarde's audio clip was courtesy of Reuters. Today's show was produced by Pierre Bienname and Anthony Banci, with supervising producer Michael Kosmides. I'm Alex Osoloff for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.