donald trump <u+2019>s surprise victory leaves large u.s. businesses bracing for revamped trade pacts and a potential crackdown on overseas operations, but the promise of lower corporate tax rates at home. the upset win by the republican nominee, who was down by several percentage points in most polls heading into election day, took markets and many corporate leaders by surprise<u+2014>and will leave them unsettled, given the uncertainty behind many of mr. trump<u+2019>s policy positions. <u+201c>the market wanted the certainty and clarity of a clinton win<u+2014>it may not agree with all of her policy proposals, but it was comfortable with gridlock,<u+201d> said brian gardner, head of washington research for the investment bank keefe, bruyette & woods. on the campaign trail, mr. trump criticized big companies like ford motor co. and united technologies corp. for moving jobs and operations overseas. he threatened to slap 35% tariffs on cars imported from mexico. <u+201c>without real policy positions from trump, it<u+2019>s very hard to understand what he<u+2019>s going to do and if he has a plan in place,<u+201d> said hal sirkin, managing director at the boston consulting group in chicago. <u+201c>it could be a very big hassle to unwind all the treaties we have.<u+201d> after the election result, more than 1,100 chief executives said in an open letter to mr. trump that he can count on business to promote <u+201c>healing and reconciliation.<u+201d> <u+201c>to be sure, we are aware that there will be times when we disagree on the specifics of important policies, and we will respectfully make our voices heard when we do,<u+201d> they wrote. <u+201c>we do believe, however, that we can be constructive<u+2014>both when we agree and when we do not<u+2014>if we can all approach challenging situations in good faith, guided by an unwavering commitment to a greater purpose.<u+201d> the letter was organized by the national association of manufacturers, a major washington trade group. the signers include dennis a. muilenburg of boeing co. , wes bush, ceo of northrop grumman corp. , david taylor, ceo of procter & gamble co. and gregory hayes of united technologies corp. as of september, no ceo of a fortune 100 company had donated to mr. trump<u+2019>s campaign and some, including apple inc. <u+2019>s tim cook and berkshire hathaway inc. <u+2019>s warren buffett, backed hillary clinton. on tuesday, cisco systems inc. chairman john chambers, a lifelong republican, said he voted for mrs. clinton . mr. trump has been critical of global trade, the north american free trade agreement and the trans-pacific partnership, a trade agreement to lower or eliminate tariffs between the u.s. and 11 other countries including japan and vietnam. any push by the trump administration to craft new bilateral agreements is a potential headache for firms like general electric co. and caterpillar inc. that have supported free trade as a way to gain access to overseas markets, analysts said. in a business-school commencement address in may, ge chief executive jeff immelt said companies should react to growing protectionism by producing more goods close to where they will be bought, thus reducing exports, among other efforts. <u+201c>obviously we are concerned about the antitrade rhetoric, a lot of the antibusiness positions and it<u+2019>s very worrisome,<u+201d> fedex corp. ceo fred smith said of both candidates in a recent earnings call. <u+201c>but hopefully, after the election cooler heads will prevail.<u+201d> u.s. stock-market futures sank on tuesday evening , while safe havens like u.s. government bonds and gold rallied. mr. trump has shown himself flexible in his policy positions, and a grim market response could prompt him and his advisers to rethink their priorities, predicted daniel clifton, head of washington research for strategas research partners. <u+201c>they<u+2019>re going to sell off on protectionism, but if he<u+2019>s killing the market on that kind of stuff, he<u+2019>ll change tactics and focus on taxes<u+201d> and other domestic issues, mr. clifton said. mr. trump has proposed overhauling u.s. corporate taxes by reducing the corporate 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 plans to spend on new infrastructure projects. mr. trump<u+2019>s campaign argues that in addition to forestalling inversions<u+2014>acquisitions that enable companies to re-domicile abroad<u+2014>the plan would accelerate u.s. economic growth. <u+201c>his view is if you lower the tax rate at the corporate level, more money is coming back into the country,<u+201d> said scott kaplowitch, a partner at edelstein & company llp. <u+201c>you would think twice about investing overseas if the tax rate came down in the u.s.<u+201d> mr. trump has vowed to dismantle the affordable care act<u+2014>a move that could hinge on democrats<u+2019> ability to block legislation in the senate<u+2014>and to allow health insurers, which currently are regulated by the states, the ability to compete across state lines. either has the potential to upend the u.s. health-insurance market, which is still coming to grips with the changes wrought by the aca. mr. trump has spoken out against media consolidation, saying his administration would seek to block at&t inc. <u+2019>s proposed $85 billion acquisition of time warner inc. <u+201c>it<u+2019>s too much concentration of power in the hands of too few,<u+201d> he said in october. mr. trump has also been critical of china, one of the u.s.<u+2019>s largest trading partners. he has said he plans to 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. any friction with china could spell trouble for companies such as apple and procter & gamble, which rely on chinese factories to make many of their products as well as chinese consumers to buy them. the real-estate mogul has also promised to punish those violating u.s. trade rules. whirlpool corp. finds itself in trade disputes with foreign rivals, in particular south korean companies it accuses of selling washing machines at less than they cost to produce. <u+201c>we will continue to work with leaders in washington to support open, rules-based trade,<u+201d> a whirlpool spokeswoman said last week. mr. gardner, of keefe, bruyette & woods, said regulation by the securities and exchange commission and the commodity futures trading commission could be less uncertain under a trump presidency than it might seem. he expects mr. trump to lean on advisers<u+2019> recommendations for all but the most senior appointments. if that is the case, mr. gardner predicts, <u+201c>you wind up having more traditional-type republican nominees.<u+201d> <u+2014>richard rubin contributed to this article. write to theo francis at theo.francis@wsj.com and andrew tangel at andrew.tangel@wsj.com
u.s. businesses brace for uncertainty - wsj
theo francis andrew tangel