US business lobby warns Trump tariffs could backfire

A top US business lobby Tuesday praised President-elect Donald Trump's emphasis on boosting US manufacturing jobs, but warned it could backfire if he provokes a trade war.

"I am at this point optimistic, although I am little bit worried about some of the rhetoric," said Doug Oberhelman, chief executive of Caterpillar and chairman of the Business Roundtable.

Oberhelman echoed other business groups that have broadly praised some of the early signals from the incoming Trump administration, including its emphasis on lower taxes and regulatory reform, as well as several cabinet picks who come from the private sector.

But groups like the Chamber of Commerce and many business leaders have expressed concern over Trump's threats of protectionism, against trading partners like China and Mexico, as well as companies that offshore jobs.

Oberhelman said in a conference call with reporters that threats by Trump to enact 35 percent punitive tariffs on imports could harm companies like Caterpillar, which employs thousands of workers at midwestern plants who produce heavy equipment that are sold in Brazil, China, India or other overseas markets.

Some of Caterpillar's plants export as much as 80 percent of the goods made here, said Oberhelman, who will step down from the iconic American manufacturer in March.

"There's a lot of hourly jobs and production jobs for our company and our country that are contingent on that" trade, Oberhelman said. "So I do worry about retaliation for a 35 percent tariff or some kind of unilateral action against a trade partner."

However, he was more positive about Trump's expressed goal of improving free trade agreements to get a better deal for America.

"I think the better way is if there's a positive engagement between the administration and business and those foreign countries to figure out how we can all win and I think that's exactly the debate that President-elect Trump spurred," he said. "Because if he thinks he can negotiate better, we ought to."

The comments came as the Business Roundtable released its quarterly survey of 142 chief executives that showed 67 percent expected an increase in sales over the next six months, compared with 59 percent with that view in the prior quarter.

The survey also showed 35 percent of chief executives expected higher employment compared with 27 percent in the third quarter.

However, just 35 percent expect higher capital spending, down from 38 percent in the third quarter.

Business Roundtable President John Engler predicted the group's next survey would show bigger jumps in the components if CEOs believe "all this talk (from Trump) is being converted into reality."