Who may lose amid the CEO backlash and Trump? Americans.

Adam Shell | USA TODAY

Show Caption Hide Caption Three CEO's quit Trump's advisory council after Charlottesville More CEOs are turning the back on President Trump following his delayed condemnation of white supremacists after the violent rally in Charlottesville.

President Trump is losing important friends in the corner offices of Corporate America and that could be hazardous to the health of his economic ambitions.

The Trump agenda, already reeling from political infighting in Washington, D.C., scandal and turmoil in his administration and missteps by the tweet-driven president himself, has a new roadblock to confront: CEOs that are distancing themselves from him after the deadly violence this weekend in Virginia during a white supremacist protest.

The president has come under fire for not quickly and forcibly denouncing the racist groups involved in the chaos in Charlottesville, Va.

"The business community peeling back support doesn't make (Trump's challenge) any easier," says Brian Nick, chief investment strategist at TIAA Investments.

Trump's diminished stature in the eyes of some CEOs -- including Kenneth Frazier at drugmaker Merck, Brian Krzanich at tech giant Intel and Kevin Plank of athletic-apparel maker Under Armour, all who have resigned from the president's manufacturing advisory council -- is the latest challenge to the president's ability to push his agenda of tax cuts and infrastructure through Congress.

The obstacle around the corner

The public rebuke of Trump from even a small handful of top U.S. executives could have negative repercussions for the economy and financial markets if it causes business and investor confidence to take a hit. And if it leads more Republicans to break ranks with the president.

The most immediate worry, however, is how Trump's latest setback will impact his ability this fall to get a new budget passed and negotiate with Congress to raise the nation's debt ceiling — the amount of money the country can borrow to help pay its bills.

"The Trump agenda will hit an enormous obstacle in September because of budget issues, and he doesn't seem to have the political capital to prevail," says Greg Valliere, chief global strategist at Horizon Investments. "Charlottesville was the last straw for some Republicans, who are sick of defending Trump. So they will essentially ignore the White House."

The biggest risk is a fresh bout of uncertainty that will result in businesses turning more cautious, which could slow down the economy and the hiring of workers.

"When businesses are dealing with a chaotic government and a series of unknowns, the natural instinct of decision makers like CEOs is to defer decisions and wait for clarity," says David Kotok, chief investment officer at Cumberland Advisors, a money-management firm based in Sarasota, Fla.

Other Wall Street pros say the latest Trump controversy is "political noise" and not likely to derail financial markets. "What is the feedback loop into the real economy? Unless it does work its way into the economy (in a negative way) it is unlikely to have a long-lasting impact on the market," says Katie Nixon, chief investment officer at Northern Trust Wealth Management.

The risk of staying and the risk of going

Sydney Finkelstein, author of Why Smart Executives Fail and director of the Center for Leadership at the Tuck School of Business at Dartmouth College, says it is too early to say whether this is the "tipping point" for lawmakers when deciding whether to stick with Trump or risk political backlash from constituents.

Finkelstein says business leaders must also weigh the risks of either denouncing Trump or steering clear of controversy by avoiding the issue.

Many CEOs, he says, are reluctant to refute or take on the president publicly for fear of getting in Trump's line of fire. But Finkelstein says there is a business risk of doing nothing, as employees and people that buy a company's products are watching.

"By not speaking up," says Finkelstein, "you are explicitly in agreement with how the administration has handled this. But you can't just sit on the sidelines if you are a leader, if you have hundreds of thousands of employees and millions of customers. That is an abdication of your responsibility as a leader."

CEOs that do speak out against injustice do so for business reasons.

"They're finding the cost of alignment with Trump is too high," says Bill Klepper, professor of management at Columbia Business School. "They have a social contract with stakeholders. Here's what we stand for. These are our core values. Here's how we're going to contribute and win as a business in society. And we're going to do it through ethical principles."

The CEO of retail giant Walmart, Doug McMillon, weighed in on what critics say was Trump's delayed denunciation of white supremacists and other hate groups.

The president "missed a critical opportunity to help bring our country together by unequivocally rejecting the appalling actions of white supremacists," McMillon wrote in a memo to employees. "I will," he added, "continue to strongly advocate on behalf of our associates and customers, and urge our elected officials to do their part to promote a more just, tolerant and diverse society."

Wall Street is overlooking Trump's missteps — for now

For now, Trump's missteps have been overlooked by Wall Street. Not until the economy slows down, or corporate earnings are adversely impacted, or companies stop hiring, will investors view the latest political crisis for Trump as a big negative.

And today's Tuesday's reports on July retail sales and August homebuilder confidence continue the narrative of a stock market and economy being fueled by better performance.

"People have been willing to look past the slow start to Trump's policy agenda because the economy seems to be doing OK on its own," says TIAA's Nick.

Trump's pro-business mentality and push to reduce red tape and regulations on businesses have already resulted in improved confidence levels for consumers, small businesses and CEOs. And even though expectations are low for Trump's tax cuts and other agenda items getting enacted soon, the market and economy will likely get a boost if Trump and Congress can get something done by early next year, says Nixon of Northern Trust.

Adds Brad McMillan, chief investment officer at Commonwealth Financial Network: "I don't see the resignations of the CEOs from the advisory council as being any sort of a game changer. Business has always had an arms-length relationship with politics."

Contributing: Roger Yu

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