Executives world-wide returned to work Wednesday to face a radically changed political landscape as they weighed the ramifications of Donald Trump’s surprise election—the second big shift for global businesses in recent months after the U.K.’s vote to leave the European Union.
U.S. businesses braced for revamped trade pacts and a potential crackdown on overseas operations, coupled with the promise of lower taxes, less regulation and higher infrastructure spending at home. Executives in Asia and Europe said they were hopeful their close ties with U.S. economy would endure the political upheaval and heated campaign rhetoric.
In an open letter Wednesday to the president-elect, a group of CEOs including the leaders of Boeing Co., Procter & Gamble Co. and United Technologies Corp. expressed an “urgent need to restore faith in our vital economic and government institutions.”
Mr. Trump had harsh words on the campaign trail about big companies like Ford Motor Co. and United Technologies for moving jobs and operations overseas. For example, Mr. Trump promised to slap 35% tariffs on cars imported to the U.S. from Mexico.
“We are aware that there will be times when we disagree on the specifics of important policies,” the CEOs wrote in a letter organized by the National Association of Manufacturers, a major trade group. “We do believe, however, that we can be constructive… if we can all approach challenging situations in good faith.”
The President-elect has been critical of global trade, the North American Free Trade Agreement and the Trans-Pacific Partnership, an agreement to lower or eliminate tariffs between the U.S. and 11 other countries including Japan and Vietnam. He has also been critical of China, the biggest U.S. trading partner.
“This election is the latest step in a longer-term, global trend that we have been adjusting to for a while—one that’s marked by political volatility and populism,” Jeff Immelt, CEO of General Electric Co., wrote in a message to employees. He pledged to work with the new administration but stressed GE’s commitment to workplace diversity and globalization.
Charlie Ergen, CEO of Dish Network Corp., said a Trump administration could bring bipartisan support for infrastructure spending, lighter regulation and a “more rational” tax code that would bring offshore money back into the country. “You’ve got a lot of potential positives for business in general,” Mr. Ergen said.
Mr. Trump’s election sent waves through the U.S. health-care industry, providing relief to drugmakers worried about the specter of government price limits but fanning fears for hospital operators and some health insurers that the Medicaid expansion in President Obama’s health law could get rolled back. That provision had brought those companies more paying customers.
Mr. Trump has vowed to repeal the Affordable Care Act, though many analysts think it is unlikely all of the ACA’s effects would be undone. Mr. Trump also took aim at high drug prices during his campaign, hinting at measures such as re-importation of drugs and giving Medicare powers to negotiate drug prices to limit price rises.
J. Mario Molina, the CEO of Molina HealthCare Inc., a large insurer of Medicaid patients, expects the new administration to expand Medicaid further. “Health-care reform is in place, it’s going to be modified, it’s going to move forward,” he said. “We’re going to see Obamacare 2.0, maybe they will call it Trumpcare, or Ryancare.” He suggested that the law’s exchanges might also survive but change—perhaps with reduced subsidies and more flexibility for insurers.
Mr. Trump has promised to spend $ 1 trillion on infrastructure projects, a position that was applauded by Caterpillar Inc., which also relies heavily on export markets. “We’ve got a lot to do at home on building our own infrastructure in this country, and we are excited about some of the things that has said in this regard,” said Kathryn Dickey Karol, Caterpillar’s vice president for global government and corporate affairs.
But Martin Richenhagen, CEO of farm-equipment maker Agco Corp., said he is concerned about Mr. Trump’s repeated support for trade protectionism. “That would be a nightmare if we make life difficult for imports and exports,” said Mr. Richenhagen, who was in Germany this week. “We need to explain that to him. The Europeans are very concerned.”
Mr. Trump has proposed overhauling U.S. corporate taxes by reducing the rate to 15% from 35%. His plan also provides for a one-time tax rate of 10% for repatriated corporate profits, which would help fund infrastructure projects. About $ 2.4 trillion in overseas cash sits on the balance sheets of U.S. corporations, sheltered from U.S. corporate income taxes because the companies have declared it unlikely to be used in the U.S.
Mr. Trump said he would instruct the U.S. Trade Representative to bring trade cases against the Chinese to punish them for allegedly using unfair subsidies to help their companies. That gave a boost to shares of U.S. producers like US Steel Corp. but could spell trouble for everyone from Apple Inc. to Wal-Mart Stores Inc., which rely on Chinese factories.
The National Retail Federation is keeping a close eye on how Mr. Trump might alter cross-border trade, tax policy and labor laws. “The retail supply chain is a thoroughly global supply chain,” said David French, the group’s senior vice president of government relations. “Anything that threatens two-way trade can hurt retail and consumers,” Mr. French said.
Mr. Trump intentions for the energy industry were clear: put coal miners back to work, undo subsidies for renewable power and end U.S. participation in global efforts to stop climate change.
Scott Sheffield, chief executive of Pioneer Natural Resources Co., a major U.S. producer in West Texas, said removing onerous regulations would help put oil employees hit hard by a two-year energy bust back to work. “His message about creating jobs is why he broke the blue wall” and attracted votes from Democrats in some states, Mr. Sheffield said.
Continental Resources Inc. CEO Harold Hamm, Mr. Trump’s chief adviser on energy issues, said subsidies for renewable energy like solar and wind should be eliminated. “None of it should be subsidized, none of it,” Mr. Hamm said Wednesday in an interview, the morning after he attended Mr. Trump’s victory party. “If it makes it in the market, fine.”