new York
Cnn
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President Donald Trump often champion The main investments of companies as proof that its economic program is starting to work.
But its chaotic policy could have the opposite effect: it could paralyze businesses.
It is difficult to imagine a more chaotic and troubled environment than the act of opening of this Trump presidency. And for CEOs to make billions of dollars in projects of several years in America, they need stability and clarity.
The markets found (except when they are Melt with false rumors), the turbulence of the trade war is outside the graphics and the confidence of consumers is plunging.
“Without a doubt, it could freeze things rather than stimulating investment,” said John Graham, professor of finance at Duke University.
These days, it is difficult for CEOs to know what will happen in the next 10 minutes, not to mention the next 10 months. They can choose to cancel job plans or even dismiss workers. For each company that decides to invest in a factory to avoid prices, another may be too nervous to spend.
“It is difficult for business leaders to see very far on the road right now,” said Graham. “There is a lot of dust in the air and he will have to settle before people can make predictions that will lead to an increase in manufacturing in the United States.”
James Bullard, former president of the Federal Reserve Bank of St. Louis, told CNBC on Monday that there was A growing risk of repetition of the Smoot-Hawley lawThe famous 1930 tariff hike which aggravated the great depression. European countries had retaliated with their own prices, and American imports fell 40% in the two years that followed Smoot-Hawley.
“Who wants to invest when you don’t know what rules will be?” Said Bullard.
Mary Lovely, principal researcher at the Peterson Institute for International Economics, said that companies will find it difficult to invest if they do not know how sustainable prices are.
“Uncertainty is at a level that many of us have never seen before,” said Belle.
Even some of Trump’s supporters make this point on chaos injuring investments.
Bill Ackman, the billionaire of hedge funds that approved Trump last election, warned that “commercial investment stops at a stop” if the president does not break the prices. Although he agreed with Trump’s broader point that some nations have “benefited” from the United States and killed millions of jobs with unfair commercial tactics, he expressed his concerns about a large-scale business war.
“By placing massive and disproportionate prices on our friends and enemies and thus launching a world economic war against the whole world,” said Ackman job On X, “we are in the process of destroying confidence in our country as a trading partner, as a workplace and as a market to invest in capital.”
Price threats have made companies almost impossible to plan. Many cannot understand the cost of their goods if they do not know if the prices on Mexico and China will be 0% or 50%.
And without knowing if other countries will slap them reprisals, companies do not know what the request for their goods will be.
It is true that the market is not the economy. And Wall Street is not Main Street.
But they are inextricably linked, and the American markets have harshly plunged In response to developing trade war. In short, investors are panicked.
And market collapses have a real economic impact: “When the markets crash, new investment judgments, consumers stop spending money and companies have no choice but to reduce investments and firefighters,” said Ackman.
Lovely said it was “anyone guesses what is the value of the dollar tomorrow, even less in 10 weeks.”
This makes it difficult for multinational CEOs to plan the quantity to invest and where to do it.
Trump’s trade war has led CEOs and investment banks to warn of a potential recession – warnings that will also reflect on companies twice before hiring or investing.
Even the oil industry, among the greatest supporters of Trump, is fed up with its chaos.
On the campaign trail, the president had promised to inaugurate a period of domination of American energy and prices of take -out gas by reducing administrative formalities. These promises of deregulation are currently completely overshadowed by the turbulence of Washington.
“Administration chaos is a disaster for raw materials markets.” Drill, baby, exercise “is nothing less than a myth and a cry of populist rallying,” said an oil director Dallas was fed in a survey published last month. “The pricing policy is impossible for us to predict and does not have a clear objective. We want more stability. ”
The silver lining could be difficult to understand an environment with less stability.