- President Donald Trump abruptly shuttered two business advisory councils Wednesday, preempting further CEO defections. The groups had begun to unravel, as corporate leaders broke with Trump over his response to the violent protests in Charlottesville, VA.
- Merck & Co. chief Kenneth Frazier led the way, resigning from Trump's manufacturing council on Monday as a "matter of personal conscience." By Wednesday morning, seven other CEOs and leaders of top American companies such as Intel Corp. and business groups including the Alliance for American Manufacturing had also quit the council.
- As pressure mounted, reports spread that the separate Strategic and Policy Forum was also planning to disband of its own accord after Trump seemingly walked back his belated condemnation of the white supremacist groups who took part in the Charlottesville rally. Moving quickly, Trump then announced in a tweet he would end both the council and the Forum.
In three days, one CEO's departure escalated to a widening rift between America's top business executives and a president who entered office pledging to boost industry and manufacturing. The CEOs' public rebuke of Trump on his handling of Charlottesville comes as the administration and Republicans hope to pivot from a failed bid to repeal the Affordable Care Act to take up corporate tax reform.
For pharma, tax reform is high on the list of priorities, as many drugmakers have billions in off-shore cash holdings they are reluctant to repatriate due to the high corporate tax rate in the U.S. Pfizer, Inc., for example, has said it will move slowly with new business development as uncertainty over tax reform has made it more difficult to adequately assess asset value.
While it's not clear if the break-up of the councils will have a lasting impact on discussions over tax reform, the public split puts strain of the administration's relationship with some of the top companies in the U.S.
The steady wave of resignations also highlights the ebbing power of Trump's tweets over corporate action. After Merck's Frazier announced his departure, Trump quickly attacked Frazier and Merck on Twitter, calling out the company for "ripoff drug prices."
After the CEOs of Intel and Under Armour joined Frazier in resigning, Trump said he would replace each leader who dropped out. Less than 24 hours, he put both councils to rest.
Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!— Donald J. Trump (@realDonaldTrump) August 16, 2017
Caught in the crossfire of the fast-moving events was Johnson & Johnson CEO Alex Gorsky, who announced Tuesday he would remain on the manufacturing council to "remain engaged."
But following Trump's combative press conference on Tuesday, where he again blamed both sides for the violence in Charlottesville, Gorsky apparently reconsidered. In a statement released 13 minutes after Trump had tweeted he would end both the council and the Strategic & Policy Forum, Gorsky said he would no longer participate in the group.
"The President’s most recent statements equating those who are motivated by race-based hate with those who stand up against hatred is unacceptable and has changed our decision to participate in the White House Manufacturing Advisory Council," said Gorsky.
Johnson & Johnson later clarified that the decision to leave the council had been made before the president's tweet. Still, the reversal did few favors for J&J from a public relations perspective, especially when compared with the positive responses to Frazier's strong stance.
Gorsky's back-and-forth also reflects the difficult line business executives have to walk to balance the image of their company with remaining an active participant in discussions with a White House continually under criticism.