The Department of Justice’s recent decision to drop its investigation of current Federal Reserve Chair Jerome Powell and the Trump administration’s nomination of Kevin Warsh to succeed Powell suggest that the White House is at last beginning to heed the growing concerns of a broad array of important figures in business and finance. In the past year, economists, former Fed chairs and Treasury secretaries, Republican lawmakers, and (perhaps most notably) JP Morgan Chase CEO Jamie Dimon have all spoken out in defense of the Fed’s independence.

Their pivot came after months of corporate silence as the administration ratcheted up its pressure on Powell and on Fed Governor Lisa Cook. In corporate America during the Trump era, the public and unified advocacy for Fed independence stands out as an exception; the rule has been to keep one’s head down, as business leaders have stayed mum on a variety of extraordinary threats to their enterprises and to the broader economy.

The situation represents a stark contrast to the era of stakeholder capitalism, which reached its apogee toward the end of the 2010s. In 2019, 181 CEOs signed onto the Business Roundtable’s Statement on the Purpose of a Corporation, which expanded the industry conception of a company’s constituency to include customers, employees, suppliers, and communities. By the start of 2020, when business leaders at the World Economic Forum’s annual meeting in Davos came to together to champion stakeholder capitalism, so-called sustainable assets that consider environmental, social, or governance (ESG) concerns reached over $30 trillion globally—36 percent of all assets under management.

The rise of stakeholder capitalism was less a repudiation of shareholder primacy than an acknowledgment that so-called externalities matter for business performance. The risks of externalities such as climate change, executives came to understand in this period, needed to be managed, and there were commercial benefits to be gained from doing so. But as momentum grew, mission creep set in. Companies responded to the murder of George Floyd in June 2020 and the reckoning over racism that followed by matching their commitments to net-zero greenhouse-gas emissions with a flurry of programs and proclamations on social justice and diversity, equity, and inclusion (DEI). Unfortunately, it did not take long for ESG and DEI to become confusing shorthand for corporate responsibility, good intentions, and sometimes performative activities that conflated material business risks with a spate of more nebulous concerns. Although largely well meaning, the medley of corporate pronouncements stoked significant resistance from many quarters. By 2024, a backlash against what detractors had come to deride as “woke capitalism” was building, just in time to help Donald Trump regain power.

The hush that has accompanied Trump’s return to the White House is not simply a pendulum swing. During the era of stakeholder capitalism, executives felt empowered to take strong stands on issues that they had historically addressed through political channels. By contrast, the corporate quiet of the current moment comes as the threats to the interests of individual companies and to the economic foundations on which they rely are much more fundamental. Today, unwillingness to appear political or partisan (and an intense fear of provoking the president’s ire) is preventing executives and investors from contending with material and systemic risks created by the Trump administration’s assaults on various institutions and flouting of traditional norms: the erosion of the rule of law, the compromised independence of federal agencies, and the intimidation of entities responsible for knowledge discovery and dissemination in an increasingly anarchic information ecosystem.

Adherents to the shibboleth that markets price in risk, business leaders have counted on the sensitivity of financial securities to restrain the administration. Yet although the bond markets have wavered at times, record-high stock prices do not yet reflect these real and present risks. The irony is that corporate silence poses dangers not only to the foundational pillars of democratic capitalism but also, by extension, to bottom lines.

To navigate the rest of the Trump era, corporate leaders must figure out how to differentiate mere commercial concerns from systemic risks that would imperil the freedom of the markets on which their companies depend. They must judge when the president’s agenda undermines not just their particular interests but also the broader system in........

© Foreign Affairs