Banks may be willing to swallow the increasing costs of President Donald Trump's sweeping tariffs — if such policies come with the carrot of deregulation.
While many industry and economic experts have raised concerns that Trump's aggressive tariff regime could cause inflation to surge and depress the economy, bank executives signaled this week at conferences that they weren't as concerned about the consequences.
"If tariffs increase cost, if inflation stays a little higher, I can handle it if I get some benefits from deregulation to reinvest," Moynihan said, speaking about the bank's commercial customers. "So there's a belief that the margin expansion of deregulation will come. Taxes won't go up. And therefore, they'll have a little bit to absorb it and pass some price through to the customer, and that mix will work out."
Other executives at major banks like
But Isaac Boltansky, director of policy research at BTIG, said bank leaders are likely avoiding criticizing
"I think, ultimately, the bank CEOs have been conditioned to take what they can get in D.C.," Boltansky said. "I think that they realize that they have much more capacity to influence the regulatory discussion than they do the geopolitical currents that drive Trump's trade policies. They're sticking to what they can influence."
Ian Katz, policy analyst at Capital Alpha Partners, said business leaders are also likely trying to stay out of Trump's line of fire. Last month, Trump called out Moynihan and
Katz added that, along with leaders going for diplomacy, there's still a level of unknown. While the final result of tariffs is still up in the air, he said, it's easier to predict what the regulatory landscape and its effects may be.
"We don't know every rule that's going to go by the wayside, and we don't know the timing, but you have a pretty good sense that it's going to be less burdensome on banks, and less burdensome generally," Katz said. "But on tariffs, there's just a lot of uncertainty as to exactly what's going to happen, so there's not much point in being too vocal when you don't know what the target is."
Trump has consistently said he would use tariffs to influence trade. In the last two weeks, the president has levied an additional tariff on products made in China, cut exemptions of aluminum and steel tariffs, and readied 25% tariffs to impose on Mexico and Canada. On Thursday, Trump signed a memorandum to assess and propose customized reciprocal tariffs to reel in what he claims are unfair practices by trade partners.
According to
The study showed that the Canadian and Mexican tariffs could also increase inflation in the U.S. by more than 1.3 percentage points, or 0.8 percentage points if those countries retaliate. Even without the impact of tariffs, the consumer price index has been steadily increasing for months —
Boltansky said it's unlikely that targeted regulatory changes can offset the negative impact that would come from an aggressive trade regime, especially if the trade partners of the U.S. react with retaliatory policies. However, the regulatory changes could have longer staying power than tariff wars, which he said are viewed as damaging but relatively short-lived.
He added that he thinks Wall Street isn't reacting more harshly right now to the potential tariffs because investors believe Trump uses the equity market as a barometer of his policies.
"I don't think Congress is going to be a governor on Trump. I don't think that the courts are going to be a governor on Trump," Boltansky said. "But there is still a firm belief in certain corners of the market and in certain corners of the banking community, that the economy and the market at large are going to be governors on Trump."
Speaking to reporters from the Oval Office, the president was asked if he wanted to eliminate the bureau. "I would say, yeah," Trump replied. "Because we're trying to get rid of waste, fraud and abuse."
Chris Gorman, CEO of
"We've lived through most of these tariffs before. … So I think it's a pretty good climate," Gorman said.
Boltansky said that while Trump dropped similar tariffs during his first administration, businesses got the bonus of tax cuts. While those cuts will probably be extended through the current administration, they aren't likely to get slashed like in 2017.
Jennifer Piepszak, chief operating officer at
"We think about the policy, the headwinds and the tailwinds, which we've all been talking about now for weeks — the tailwinds of taxes and deregulation and the headwinds of tariffs and immigration," Piepszak said. "And it remains to be seen where that all nets out, but I think there's reason to be optimistic that it could be a net positive."
