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Trump heeded our advice on China, say CEOS

The US business leaders who served on the two now-defunct advisory groups to President Donald Trump have suffered a hail of opprobrium for their involvement. But some of them continue to believe that their efforts were worthwhile.

They knew when the administration convened the two groups, the strategy and policy forum and the manufacturing and jobs initiative, that joining would expose them to reputational risk, but they believed that working with Mr Trump would also give them an opportunity to shape the administration’s position.

The president’s remarks on Tuesday, including the comments that there were “very fine people” among the neo-Nazi protesters in Charlottesville at the weekend, convinced almost all the business leaders that they had to end the association with him.

But several argue that their engagement brought significant benefits, in particular over the issue of labelling China a currency manipulator.

In an interview with the Financial Times on April 2, Mr Trump was still sticking to his argument from the campaign trail that “they [China] are world champions” at currency manipulation.

But at the meeting of the strategy forum on April 11, a succession of executives argued that the accusation was misguided and counter-productive.

“As it went round the table, just about everyone there said it would be a really bad idea,” remembers one former member.

When he spoke to the Wall Street Journal the following day, Mr Trump had shifted his line completely: he said he would not label China a currency manipulator, and since then the issue has been allowed to fade.

Mark Weinberger, chief executive of EY who was a member of the strategy forum, wrote in a note to staff yesterday that it had “had a positive impact on issues such as trade, economic growth and paid leave for families”.

The business leaders were not always successful in their attempts to persuade Mr Trump. Many of them urged him to keep the US in the Paris climate agreement, but he rejected their advice.

Elon Musk of Tesla quit both advisory groups over that decision in June, and many other members were unhappy about it. But Stephen Schwarzman, the Blackstone chief executive who chaired the strategy forum, argued that the group should stay together to continue make the case for business.

When they heard Mr Trump’s remarks in the marble-clad lobby of Trump Tower on Tuesday afternoon, however, many of the business leaders decided it was time to draw a line.

Jamie Dimon (left): “There is no room for equivocation here” © Getty

They had been reassured by Mr Trump’s prepared statement in the White House on Monday, when he had unequivocally condemned “the KKK, neo-Nazis, white supremacists, and other hate groups that are repugnant to everything we hold dear as Americans”.

But on Tuesday, Mr Trump observed that “you also had people that were very fine people on both sides” of the protests, including those “innocently” demonstrating against the removal of a statue of Confederate General Robert E Lee.

“He was like an actor stepping on his own lines,” says one former member of the strategy forum, of Mr Trump’s Tuesday press conference. “It’s meant to be about infrastructure, and then all that goes out the window.”

Members of the forum talked about what they should do throughout the afternoon, and on a call at about 9pm that evening, some chief executives, including Indra Nooyi of PepsiCo, Ginni Rometty of IBM, and Rich Lesser of the Boston Consulting Group, concluded that the full membership should make a decision the following day.

Mr Schwarzman had been reticent about his own position, but overnight he convened a call for the entire forum at 11.30 on Wednesday morning. He also wrote a statement explaining that the group had decided to disband, which he read out on the call for the other members to approve.

When it came to a vote, all but two of the members agreed with the plan to dissolve the forum, according to people who were on the call. Some members had said they would quit if the others tried to continue.

Jamie Dimon, chief executive of JPMorgan Chase, later sent a note to employees explaining why he supported the decision.

“I strongly disagree with President Trump’s reaction to the events that took place in Charlottesville,” he wrote. “There is no room for equivocation here.”

Mr Schwarzman rang the White House to tell the president the group was disbanding, and shortly afterwards Mr Trump tweeted: “Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both.”

The strategy forum issued a statement saying, as a courtesy to Mr Trump, that “the president and we are disbanding the forum”. In reality, the decision was taken by its members alone.

The manufacturing council, meanwhile, had already been falling apart, with eight members announcing they were stepping down by the time Mr Trump tweeted. Jeff Immelt, chairman of General Electric, had not yet said he was quitting, but had already decided to go, the company said.

John Flannery, GE’s new chief executive who took over from Mr Immelt at the beginning of August, explained in a note to staff: “Following the President’s deeply troubling statements yesterday [Tuesday], we decided that GE needed to leave the committee on American manufacturing.“

With the advisory groups gone, US businesses will need to find other ways to make their points to Mr Trump. With the tax reform debate in Congress looming, the lack of a clear channel of communication is worrying for some.

The position staked out by the president, however, made it impossible for the framework of advisory groups to survive.

Additional reporting by Stephen Foley, Anna Nicolaou and Richard Waters