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Trump axes business panels as key CEOs decry response to Charlottesville

U.S. President Donald Trump waves from his motorcade vehicle in New York on Aug. 16, 2017.

Spencer Platt/Getty Images

Donald Trump dismantled two business councils on Wednesday, as key executives cut ties with the White House amid a growing backlash to the President's comments that equally blamed white supremacists and anti-racism protesters for a deadly clash over the weekend.

The termination of the White House advisory councils is a blow for Mr. Trump, who had courted business executives as part of his agenda to launch a new era of economic growth in the United States. Instead, Mr. Trump has been publicly rebuked by corporate America's most powerful leaders, eroding his relationship with the business community and adding another distraction to his tumultuous presidency.

The problems started after Mr. Trump's tepid response to a white-supremacist rally in Virginia, where one of the counterprotesters was killed and more than a dozen were injured.

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Merck CEO Kenneth Frazier stepped down from the White House manufacturing council early on Monday, citing his personal conscience and responsibility to "take a stand against intolerance and extremism."

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Mr. Frazier's resignation kick-started a number of executive departures over the course of 48 hours. By early afternoon on Wednesday, the CEO of 3M had resigned and Campbell Soup said its executive was quitting the council after initially saying she would remain.

Mr. Trump said in a tweet: "Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!"

Since Mr. Trump was elected, businesses have been trying to navigate his presidency without running afoul of their corporations' values. Most have refrained from publicly criticizing the President over some of his contentious policies, such as banning immigration from several Muslim-majority countries.

Mr. Trump initially refused on Saturday to denounce the neo-Nazis and other white supremacists at the rally.

"As we watched the events and the response from President Trump over the weekend, we too felt that he missed a critical opportunity to help bring our country together by unequivocally rejecting the appalling actions of white supremacists," Wal-Mart CEO Doug McMillon said in a statement on the company's website.

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Under public pressure to condemn the white supremacists by name, Mr. Trump on Monday called neo-Nazis, the Ku Klux Klan, white supremacists and other hate groups thugs and criminals. This was hours after Mr. Frazier had resigned.

Nevertheless, the manufacturing council still lost the support of the leaders of Under Amour, Intel Corp, the AFL-CIO and the Alliance for American Manufacturing.

A day later, Mr. Trump then doubled down on his initial weekend remarks and said there was blame on both sides as well as "fine people" in the white-supremacist rally.

After those comments, more business leaders cut their ties with the White House and publicly chastised the President.

JPMorgan chief executive Jamie Dimon, who was part of Mr. Trump's Strategic & Policy Forum, said he strongly disagrees with Mr. Trump's reaction to the events that took place in Charlottesville. "There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity," he said, according to a staff memo obtained by Bloomberg.

Mr. Trump's Secretary of State, the former ExxonMobil CEO Rex Tillerson, made a point of condemning the hate and violence, when he was speaking at the first day of renegotiations of the North American free-trade agreement.

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The vocal condemnation from the business community is in sharp contrast to how companies first operated during the earliest days of the Trump presidency. Then, companies were trying to curry favour with the administration.

High-profile CEOs agreed to sit on various forums as a way to provide input about their industries. This in turn gave Mr. Trump credibility with other members of the business community.

"Now, the costs are becoming bigger than the benefits," said Brayden King, a professor of management and organizations at Northwestern University's Kellogg School of Management. "It now becomes not courageous but common sense. You don't want to be the last one standing."

When Mr. Frazier announced he was quitting, Mr. Trump bashed the CEO on Twitter and said Merck was driving up drug prices and taking jobs out of the United States.

"Putting him down for drug prices when he is quitting over white supremacy. [Trump] lost in that battle,"said Paul Argenti, professor of corporate communication with the Tuck School of Business at Dartmouth.

"There may be something to be gained by being on his dark side. It may actually be a plus. People may start seeing being on his negative side as a plus."

This week's clash with the business community does not mean corporate America will oppose Mr. Trump's agenda. Companies have been pleasantly surprised by some of the President's actions.

Mr. Trump has embarked on a campaign to slash red tape, has promised to get rid of meddlesome financial-regulation laws and is pushing to lower the corporate tax rate.

However, these controversies are making it harder for Mr. Trump to govern.

He is "going to have a tough time getting anything accomplished in the next three years because of stuff like this, where he is losing the support of everyone," Kellogg's Mr. King said.

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Economics Reporter

Rachelle Younglai is The Globe and Mail's economics reporter. More

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