We've entered the era of scaredy-cat capitalism

Trump's bum-rush first month in office has left businesses scrambling to win over the president, avoid his ire, or simply figure out what's going on.

We've entered the era of scaredy-cat capitalism
Scared cat on top of pile of money with buildings sticking out of it
 

There's a pretty clear sentiment in America's corporate world these days: anxiety.

Yes, big business generally welcomes the deregulatory promise and likely lighter tax bill that comes with Donald Trump's second presidency. But the accompanying uncertainty of Trump 2.0 is also leaving corporate America slightly on edge. The president is issuing executive orders at a breakneck pace, but vague wording, court battles, and questions of legality mean the significance of these orders is unclear. Trump has promised to take big swings on tariffs and immigration, but how those swings actually manifest is in flux. Elon Musk is a similarly disruptive figure, with his DOGE staff firing federal workers and slashing funding for various programs at a head-spinning rate. Given the bum-rush first month, many corporate leaders are scrambling to gain some favor with Trump or, at the very least, avoid his ire.

In short, we're in an era of scaredy-cat capitalism. American business isn't moving boldly and swiftly — it's acting slowly and timidly, waiting for the uncertainties to shake out and trying not to call much attention to itself in the meantime.


When Trump took office in 2017, many CEOs were alarmed by his immigration and climate policies. When Trump was inaugurated in 2025, some of America's most recognizable corporate executives were seated behind him. Major companies and leaders donated millions of dollars to Trump's inauguration fund and have visited the president's Mar-a-Lago club. If companies appeared somewhat willing to strike a tone of defiance in 2017, the vibe this time around is one of compliance.

In December, ABC News, owned by Disney, agreed to pay $15 million to Trump's future presidential library in order to settle a defamation lawsuit. Meta similarly cut a deal in January to give $22 million to settle a 2021 suit. CBS's parent company, Paramount, has thus far held out on settling a lawsuit Trump filed over a "60 Minutes" segment, though some observers believe it's only a matter of time before it folds, possibly in hopes that the administration will look more kindly upon a pending acquisition by the studio Skydance. As my colleague Peter Kafka has pointed out, these Trump lawsuits are the type that typically would not get very far — but now that he's back in the White House, the risk-reward calculus is different.

"Powerful companies with enormous legal resources are deciding that they're better off making a payment — in the form of a donation — to Trump than fighting him," Kafka wrote.

In an attempt to head off Trump's anti-DEI campaign, several companies have backed away from diversity, equity, and inclusion efforts. Companies including Target, Walmart, and Meta have announced policy rollbacks. Others, such as GM, PepsiCo, and Disney, have taken a subtler approach, quietly axing DEI language and programs. The US Chamber of Commerce has pulled much of the information about its Equality of Opportunity Initiative, announced in 2020 to "help close race-based opportunity gaps," from its website.

This isn't happening in a vacuum: The right has been increasingly vocal in its opposition to DEI efforts in recent years, and Trump has put that opposition into overdrive — and in writing. He's signed executive orders seeking to root out DEI practices in the private and public sectors, including barring government contractors from engaging in them and asking federal agencies to identify corporate targets for potential lawsuits over DEI. The plan, according to Trump, is to stop "illegal DEI." It's not clear what that means, and the underlying law hasn't changed, but it still makes companies nervous and has had a chilling effect. No one wants to be the government's target — or draw the conservative internet's ire and become the next Bud Light. Agencies may be looking for low-hanging fruit to make an example out of in order to scare others off. And regardless of what the government does, negative publicity and social media campaigns are a threat in and of themselves.

Businesses like predictability, and that's not what they're going to get from Trump.

Some business leaders may remember some of the vindictive nature of Trump's first term, such as the president's opposition to the AT&T-Time Warner merger, reportedly partly because of his dissatisfaction with CNN. In an interview with Bloomberg last July, Ken Chenault, the former CEO of American Express, cited it as cause for trepidation about a second Trump term. "The fear is real," he said.

Daniel Kinderman, an associate professor at the University of Delaware who studies business responses to right-wing populism, said companies may regret cozying up with Trump and being quick to bend to his will.

"What the government's doing is so radical that I think a lot of companies will be sorry that they got on the bandwagon or did not keep a greater distance," he said. "It's not reducing their risks."


On the domestic and foreign fronts, the perception of Trump as a loose cannon may give him an advantage in negotiations — acting unpredictable and volatile is a way to throw, say, China off balance. But for business, it can be challenging to navigate.

"Businesses like predictability, and that's not what they're going to get from Trump," said Alex Conant, a Republican strategist who was the communications director for Marco Rubio's 2016 campaign. "Trump is highly unpredictable, which creates a challenging business environment."

In a note on Tuesday, David Kelly, the chief global strategist at J.P. Morgan Asset Management, said that the policy uncertainty created by the Trump administration could slow economic growth, affect hiring, and stunt investment. He pointed to tariff threats, immigration crackdowns, federal workforce reductions, and federal budget uncertainties as areas where action could be cause for business hesitancy.

"The rapid pace of these moves, along with frequent reversals, court challenges and mixed signals on future policy actions, make it difficult for economists to assess their cumulative effects," he wrote. "Also important, and even harder to analyze, is the potential for policy uncertainty to delay business decisions."

If you're an automaker, for example, you're staring down the potential of steel and aluminum tariffs, separate tariffs on imports from Canada and Mexico, and reciprocal tariffs from trading partners. Plus, you're not sure what's going to happen with electric vehicle tax credits. It's hard to know where to begin or whether to make an investment at all. At a conference in February, Ford's CEO, Jim Farley, said Trump's moves had created "a lot of costs and a lot of chaos" for the industry.

In an interview with CNBC on Thursday, Walmart's chief financial officer, John David Rainey, said the retailer was "not going to be completely immune" from tariffs on imports from Mexico and Canada. Tariffs on imports from China would likely affect the company, too. He said that there was "far from certainty in the geopolitical landscape" and that Walmart hadn't calculated tariff increases into its financial expectations for the year.

Companies are tasked with laying out various scenarios of what might happen next — and reassuring their shareholders that they're prepared for whatever's ahead. Elaine Buckberg, a former chief economist at GM, has been in this situation before: the trade war with China that Trump kicked off during his first term.

"I feel like I was doing scenarios on China tariffs back and forth, basically, until COVID came and took away all the attention," she said. "I would prepare presentations the night before, and they'd be updated by the next morning."

Buckberg pointed to a 1983 paper from Ben Bernanke (who would go on to be the chair of the Federal Reserve) on investment decisions and uncertainty. "If there's this irreversible investment and there's uncertainty, you'd rather wait until the uncertainty clears up," she said. "And so that means you should expect lower business fixed investment, which hurts growth until this uncertainty resolves."

There's too much uncertainty for meaningful decisions to be made right now.

Congress and Trump will need to negotiate through at least one tax bill this year, as Trump's 2017 tax law is set to expire. Conant pointed out that this fight will be more uncertain for businesses. Congress may look to find ways to raise revenue — whether from higher taxes on certain activities or by eliminating tax credits. That could make for some winners and losers, and pit various industries against each other. "I don't think the business community is going to be as united this time as they were last, because there's going to be winners and losers," he said.


To be sure, businesses are benefiting from plenty of Trump's actions, uncertainty and all. He signed an executive order halting enforcement of the Foreign Corrupt Practices Act, which bars companies from bribing foreign government officials. The Trump administration is likely to be more hostile toward unions than the labor-friendly Biden administration and take a hands-off approach to regulation. Still, the insecurity of it all remains a challenge.

"I've been in Washington for 15 years, and this is the most chaotic time, where there's so many surprises that are happening on a weekly basis," said Nick Nigro, the founder of Atlas Public Policy, a research firm in Washington, DC. "There's too much uncertainty for meaningful decisions to be made right now."

The global Economic Policy Uncertainty Index, which tracks news coverage of economic policy uncertainty, has risen sharply since the 2024 election. The National Federation of Independent Business' optimism index ticked down in January, though it remains well above where it was during the Biden administration. The National Association of Home Builders survey that tracks sentiment among homebuilders found that confidence fell in February. The University of Michigan's consumer sentiment indexes dropped in February as people began to worry about tariffs and inflation concerns bubbled back up. As Americans contemplate the landscape, optimism remains, but reality is setting in, and it's a bit unnerving.

Across corporate America, a pervasive sense of unease is setting in. Businesses do not want to call negative attention to themselves, even on what many might consider run-of-the-mill diversity programs. They don't want to become a target of the president or of angry people of any political persuasion online. Meanwhile, they're managing an outlook where it seems like anything could happen — an executive order here, a court battle there, an immigration raid, a new tariff, an axed tax break. The feeling permeates through consumers and workers, too. If the federal government is taking a slash-and-burn approach to its workforce, what's stopping business from following suit? Many companies have been cutting their workforces. Plenty of consumers have wondered if they should stock up on stuff before tariffs take hold, and some have taken action.

Scaredy-cat capitalism doesn't mean panic mode — but it's a scenario where everyone's a little insecure about what comes next.


Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.

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