The one thing businesses are worried about

Rick Newman
Senior Columnist

Taxes are down. Job growth is strong. Interest rates remain low. Business conditions are almost ideal, except…

“The big picture is, everyone talks with confidence about business momentum, and the numbers are showing it,” Julie Sweet, CEO of Accenture North America, told Yahoo Finance at the Milken Institute Global Conference in New York. “But there’s always one big ‘unless.’ Like, everything’s great, ‘unless.’ And the ‘unless’ is, if there’s a trade war.”

More news on that question ought to be coming soon, since President Trump has just sent top advisors, including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, to China for trade negotiations. Trump, of course, wants to slash the US trade deficit with China and compel China to open its own markets to more American goods.

Many business leaders agree with Trump in principle. “The trade agreements were ripe for renegotiation,” Sweet says, “if nothing else because most of them have been done before the digital economy existed.”

[More from the Milken conference: Here’s what could cause the next financial crash.]

But business lobbies such as the Business Roundtable and US Chamber of Commerce have fought hard against tariffs, which often invite retaliation and can gunk up global supply chains. Scott Minerd, chairman of Guggenheim Investments, told Yahoo Finance at the Milken Conference that Trump’s trade actions threaten American living standards, and could even jeopardize national security if they go far enough.

Sweet, a board member of the Business Roundtable, sees reason for optimism. Trump announced new tariffs on steel and aluminum imports in March, but has allowed exemptions for friendly nations such as Canada and Mexico and most of Europe. Those exemptions were set to expire recently, but Trump extended them to June 1. “I’m encouraged by the postponement, because it feels like that is just a continuation of a thoughtful approach,” Sweet says. “No one wants a trade war.” Trump has yet to agree.

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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman

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