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Trade War Turmoil · Communication Breakdown

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Welcome back to Communication Breakdown, a weekly podcast from the Observatory on Corporate
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Reputation.
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Thanks for joining us.
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I'm Steve Dowling in Silicon Valley.
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And I'm Craig Carroll in New York City.
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Each week, Steve and I take a look at strategies companies are using to shape headlines and
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sometimes save their skins.
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It's a post-game show for PR Pros.
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This week, Tariff Turmoil upends earnings season, but first a deep dive on Amazon's indecent
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proposal on pricing.
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And Tuesday was one of those mornings for the Amazon Comm's team.
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Waking up to a Punch Bowl News headline,"Amazon to display tariff costs to consumers."
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The reported plans seemed designed to match what Chinese discount retailers Temu and
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Shien had started over the weekend, listing those new import charges alongside retail
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prices on their website.
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Punch Bowl's story said it all: Amazon doesn't want to shoulder the blame for the cost of
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the Trump's trade war.
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And that would over like a lead trial balloon with the White House Press Secretary Karoline Leavitt:
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announcement.
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This is a hostile and political act by Amazon."
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Minutes later, and I do mean minutes later, Amazon was out with the statement saying that whole
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tariff listing idea had only been kicked around for Amazon Hall, which is their low-cost
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section, built to compete with the Temus' of the world.
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But in Amazon's words, it was never a consideration for the main Amazon site, and they said nothing
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has been implemented on any Amazon properties.
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Apparently, that wasn't enough because the company updated its statement about an hour,
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later, adding, "This was never approved
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and it is not going to happen."
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Turns out, President Trump had called Amazon executive chair Jeff Bezos,
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Trump's campaign trail punching bag turned million-dollar inaugural donor, to express his
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displeasure with that kind of price transparency anywhere on Amazon's website.
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What happened next, we can only guess, but we can guess.
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The message got more emphatic.
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The idea now clearly dead on arrival.
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Trump later filled out his customer survey.
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[inaudible]
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[reporters shouting questions] Great. Jeff Bezos was very nice.
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He was terrific.
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He solved a problem very quickly. And he did the right thing, and he’s a good guy."
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Craig,
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It's important to keep in mind the backdrop for that Tuesday episode.
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It was the 100th day of this Trump administration, and a raft of polls are showing pretty much
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across the board dissatisfaction with the way things are going under the new regime, especially
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on trade and the economy.
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And dominating the conversation coming into the week, a steady stream of warnings that
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things are going to get worse, higher prices, and a lot more talk of shortages.
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It's putting American companies in a really tough position, and this episode with Amazon
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really illustrated both the sensitivities of the White House and the heightened sense
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of alert, shall we say, in the private sector.
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We don't know if Bezos asked how high, but the president clearly said, "Jump," and
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"Jump" Amazon did.
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The swiftness of their response was noteworthy, and then the second statement emphatically slamming
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the nail in the coffin.
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Right.
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And what makes this moment so instructive isn't just how fast Amazon moved.
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It's what they were managing.
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Not just the pricing issue, but a symbolic power signal, right?
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In this environment, transparency isn't just a policy.
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It's also positioning.
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If your transparency offends the wrong power center, it doesn't matter how accurate it is,
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the question becomes, "Who are you aligning with?"
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And that's where alignment signaling comes into play.
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It's how companies stay close to sources of power without crossing the line, without betraying
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their values or integrity, or the expectations of their stakeholders who might see that proximity
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is complicity.
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You need access, but you also need insulation.
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As one CCO told me, "If you don't have a seat at the table, you're
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probably on the menu."
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Yes, so we're going to come back to this idea of Alignment Signaling throughout today's
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episode.
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And we're going to cover some of the moves that we've seen in the automotive industry as well,
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which are very noteworthy.
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I think about what must have gone on behind the scenes at Amazon.
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Their responsiveness was really impressive and really, really fast.
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So it was probably a tight loop.
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And it worked.
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They contained the story to one news cycle, half, I mean, half a news cycle, really.
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And maybe that's to the chagrin of the White House because I think they would have liked
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to beat up on Amazon a little more, judging from that swift and furious response that you
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heard from Karoline Leavitt in the briefing room, but they handled it, I think as well as
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could be expected.
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But there was a quote in the middle of all of that that didn't get a lot of attention,
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but it really resonated with me.
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It was an unnamed White House official who was quoted in CNN's online story.
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And CNN, by the way, was also the outlet that broke that Trump had called Bezos.
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But before that, this quote really reflected this outrage at the White House over the report
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of what Amazon was planning.
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And the quote was, "naturally, Trump was upset.
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Why should a multi-billion dollar corporation shift costs onto consumers?"
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That was the quote.
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And I think that's a pretty remarkable, pretty unreasonable expectation that companies
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are faced with right now from this White House.
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But the White House knows this is coming
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and so they jumped all over Amazon at the first sign and they wanted to make it Amazon's
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fault.
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It's a political act, but that's not a political act.
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The political act is politicizing the business decision.
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So this is what companies are going to be up against, but I think the pricing transparency
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is not going to go away.
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It's already all over social media.
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Yeah.
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And I think what Amazon showed here was something that most companies, hopefully, never have
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to face- a full operational, rapid response chain of command. And that tight loop you mentioned.
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You know, that's a reputational infrastructure.
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No layers, no leaks, just the size of motion.
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And you're right, you know, this was about facts.
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This was about narrative control.
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The first statement was corporate.
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The second was political.
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And the audience for that wasn't the media or the market-
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It was one person. But here's the bigger takeaway:
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Pricing transparency is now a reputational trigger.
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You show your cost structure and suddenly you're accused of taking a side.
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And I think that's the new terrain. Even though neutral facts can be politicized, silence
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can now be recast as blame.
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So companies just can't manage communication,
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they also have to manage interpretation.
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I think that's a different game.
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Yeah.
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No, I think that silence definitely in this environment definitely opens you up to the
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risk of being blamed.
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So I think it is as much a defensive move as proactive to be out there explaining yourself.
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And I think I'm sure in hindsight that's something that Amazon would have, you know, preferred
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to have done or probably preferred to have put a halt to this before it ever got out.
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I think about it also, just as an aside from the West Coast perspective, because this punch
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pool news report came out at 2.45 a.m. here on the West Coast.
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Of course, Amazon is headquartered in Seattle and Amazon has a great sort of news tracking
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operation historically.
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So I'm certain that somebody somewhere in the globe knew about it, but I'm guessing also
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that there was a lot of operational control in the time zones that were awake and to their
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credit, they handled it, I think as well as could be expected... and swiftly.
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That puts a bow on the Amazon story just as they did on Tuesday with their quick response.
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I think I have another good example of what you've described as Alignment Signaling.
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Let's talk about it then.
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I know you have given some thought to a framework of concepts that companies should be thinking
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about in these situations.
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But let's take a look at the automotive industry this week.
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General Motors reported earnings on Tuesday, but they did not give guidance because of the
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tariffs.
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And they postponed their conference call to Thursday because the tariff situation was so
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fluid in that moment.
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Trump, remember, on his 100th day did a rally in Michigan and he gave the car makers some
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relief on these stacked tariffs, which clearly they were appreciative of as we'll talk about.
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But on Thursday, when GM did have their conference call, they lowered their guidance for the year.
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And CEO Mary Barra released her quarterly letter to shareholders, which began with a thank
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you to President Trump for what she called his "support of the US automotive industry."
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Stellantis, which makes Chrysler and other models, they also suspended their financial guidance
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for the year.
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Ford is not scheduled to report until next week, but their CEO Jim Farley went on Fox Business
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Wednesday morning, the morning after that rally by Trump and the morning after Trump gave
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the auto sector that relief on the tariffs.
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Farley's on Fox and his message is pretty clear-
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He wants to remind us that Ford makes over 80% of his vehicles in the US.
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He's going to praise the Trump administration for making the tariffs more reasonable.
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He still needs some relief on auto parts to keep US made cars affordable.
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And some other steps. About halfway through the Fox interview, Maria Bartram Ramos says,
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basically says "we get it.
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Our audience gets it.
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Ford is the most US centric automaker."
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I don't know if that flipped some kind of switch in his brain, but Farley's sound by Kixin
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and he says, Ford is the most American company.
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10 minutes later, he's on CNN and maybe he's had a little bit to think about it.
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Maybe someone from the comms team has said, "Hey, that most American thing really worked."
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But see if you can detect the messaging thrust of this CNN interview.
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We've clipped together the highlights for you.
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"Ford is the most American auto company.
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We make 80 plus percent of our vehicles here.
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And Ford is an American company.
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You know, we're the most American company.
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So if there's any company that can manage through these tariffs, it's Ford.
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You know, next week I think we'll be able to tell people kind of what the tariff bills
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for Ford would look like the most American company.
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So we're building two brand new factories in the US and we're the most American already."
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Okay.
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So clearly he made his point and everybody got it.
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But should also we can spend some time contrasting this with Mary Barra who this week was on
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Thursday on CNBC following that shareholder letter and the earnings call they had.
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She said on CNBC that she shares the president's goal of having a strong manufacturing base.
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You know, she talked about GM being committed to increase manufacturing jobs in the country.
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It's not committing exactly to what Trump wants, which I think is new plants, which is
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something that as you heard, Farley already has them in the pipeline.
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Barra was also last week at the Semaphore conference in Washington, which seems to have really
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made us splash by the way as conferences go.
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And similarly taking a very diplomatic approach.
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So we have a contrast here of two CEOs where you've seen, I think, Farley go much farther,
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much more animated than he has been in the past and very much embracing this idea
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of Ford as the most American company.
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What does this tell you about the Alignment Signaling that Ford is doing and there's lots more
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to talk about in the automakers?
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Yeah, yeah.
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I'm going to contrast it with Mary Barra's response.
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So she's taking what I call an institutional approach.
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She's respectfully nodding to the president.
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No clear alignment on policy goals, manufacturing jobs, stability and all that, but no personal
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language, no promises and definitely no sound bites.
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She's signaling the alignment without stepping into performance.
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It's very careful, composed, very stakeholder-safe.
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And her styles were restrained.
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She's leading with things.
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She's echoing Trump's manufacturing goals, very policy-focused.
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She's signaling respect for the office, but not necessarily allegiance with the person.
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Farley on the other hand is a little bit more about cultural alignment.
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He's leaning into American identity.
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He's talking US production and he drops the sound bite that Ford is the most American company.
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Look, that's what I'd meet for the current environment.
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But again, he's stopping short of over-comittng.
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No promises, no plans, just signals.
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And I would say his version is also identity-forward, saying that Ford is the most American company on repeat.
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That's not just signaling alignment.
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I think he's draping in a flag.
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He's speaking to Washington, sure, but he's also trying to speak to consumers, workers, and competitors.
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So he's trying to make it play across networks.
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Look, it's two different styles, but it's the same function and the same message.
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Stay close to power without looking like you've been captured by it.
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That's at the heart what alignment signaling is about in a Trump 2.0 world.
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Proximity without submission.
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It's alignment signaling in stereo, but the styles couldn't be more different.
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Yeah, I think what we're seeing from both car makers is not actually an effort to communicate
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to that broader audience beyond the business eyes.
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I think they're communicating to an audience of one.
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And in both the automakers and the Amazon example, I think the executives and the comms teams
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have figured out that there are no points for subtlety these days.
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We're not leaving anything to chance.
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But Farley, I think, does deserve credit for going out there and making a strong effort
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to explain Ford's position, remind people of what they do.
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I don't know where that message has been for the past six months.
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Maybe I missed it, but Farley's reputation in the industry (is) that he's a car guy.
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And when he talks about his company, he brings tremendous credibility.
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He's a leader.
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And being able to take the role of educator is a really powerful one.
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And in those clips, yes, he got repetitive-
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We make a little fun of it-
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I think he's pretty effectively trying to influence the definition of 'American' in this case.
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What it means to be an American company.
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Barra, unfortunately, I think, has not done the same this week.
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The expression to Trump and her letters didn't land with me.
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It didn't feel like a position of strength.
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But both car makers, I think, are doing their best to make the message something other than
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uncertainty.
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I think that's what you're seeing.
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Yeah.
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They're talking about how they want to hold the line on pricing, no one's making any promises.
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They want to increase production in the US.
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Ford has two plants in the works.
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I'm sure Trump will take credit for that.
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Farley is happy for GM to take some more heat and pressure for that rather than Ford.
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But the situation, as fluid, changing as quickly and unpredictably as it is, the clear and consistent
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voices are the ones I think who will best define the debate.
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Steve, I agree.
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I mean, Farley's not just defending Ford.
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He's actually shaping the narrative.
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He's trying to define what 'American company' means under pressure.
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And because he's a car guy, right,
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it lands with credibility.
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He's not just reading a script.
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He believes it.
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That gives him the runway.
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In contrast, Barra plays, I think, a shorter game, gratitude, but no real imprint.
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It looks, tone matters.
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Gratitude without grounding certainly feels like posturing.
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The audience doesn't feel the conviction.
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I think they just hear caution.
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The stability and messaging becomes a competitive advantage when everything else is unpredictable.
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But in this environment, in this media environment, the loudest voice doesn't just interrupt the signal,
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it tries to override it.
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So you've got to speak early, got to speak clearly and often, or risk being spoken for.
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But I also think, Farley speaking a little too loud personally.
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He says "the most American company," like five times across two networks, it starts to feel
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a little like over-signaling.
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And there's a moment here where clarity can cross into the performative zone.
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Say it once, its conviction.
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Say it five times (and)
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it starts to feel like it's a test that you're trying to pass.
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So I think there's a little bit of a volume dial here.
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I agree.
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That's sort of what is annoying about this environment is that it sort of has to play
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out on TV and in the messaging like this, like these over-the-top displays.
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But, and I do think at some point you put your credibility at risk.
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But I think that's clearly what Trump wants.
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Like he wants people out there, you know, parroting his ideas and praise to the point of obsesqueousness.
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That's not a good look for business leaders in the long term.
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But I think what people have figured out is that that's what works.
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And maybe that's what Farley was leaning into this week.
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Maybe he sort of tested the limits of it.
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But if we think coming into this week, we would have said that GM has played it better because
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Barra has been working behind the scenes, very little public exposure. Spoke at a
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conference last week, but there was no recording of it out there.
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And that Farley had tried earlier in the year, remember, he had his famous quote of costs
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and chaos, which we have reported many times on this podcast.
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But I think that we would have said that Barra was being more successful.
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And this week Farley comes out and he really leans into what Ford has done.
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He's trying to redefine what it means to be an American company, the most American company
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in the eyes of, I assume, the White House.
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And I think he has flipped the script.
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Yeah.
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Well look, he came out swinging, you know, he framed the issue
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as causing chaos as you mentioned. It makes Ford look proactive, even bold.
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But I think that framing also locks you in.
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You know, once you name the problem that directly... But that's the old Ford position.
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I think they have, they have changed.
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Now, now he's, "we're the most American."
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He's gone from a critical posture earlier when he was just a warning posture before.
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And he was out further than any other car makers on that.
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Now he's saying like, we're the ones to beat.
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We're the ones who are clearing the bar, Mr. President.
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We're the ones who are the most American.
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We have the two plants in the pipeline.
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And he's saying explicitly in that CNN interview, if you listen to it, he says, why aren't
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our competitors doing the same?
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So he's trying to shift the pressure to specifically, I assume, GM and Stolantis.
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Well, you know, most of these companies don't support the tariff policy, but they also can't
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afford to look oppositional.
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Yeah.
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So they're hunting for shared ground, saying things like, you know, we believe in manufacturing
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or we want American jobs.
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It's safe.
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It's broad and it gives White House something to clip.
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But as pressure mounts and Trump starts looking for symbolic wins,
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broad values won't be enough.
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He'll want action, not applause and headlines, not handshakes.
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So I think the real challenge for CCOs is threatening that line, you know, signal enough alignment
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to stay in the room without signaling so much that you lose your base.
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Yeah.
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I think that's right.
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And Alignment Signaling is a good calm strategy.
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It's a good tactic in any circumstance, just as generally being aligned is a really good
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thing.
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But I think the reason so many are just signaling alignment, as you say, is that they're
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really not aligned with the terror policy.
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They're trying to make the best of it and figure out a way to steer the administration into
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something that's more palatable.
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So they've got to find--
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And to stay in the room.
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Yeah.
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Well, you can't make any change if you're not in the room.
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So they've got to find some common value to build on.
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It's a tough spot to be in, but I think Jim Farley of Ford kind of found it this week and
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we'll see how that plays out.
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Let's talk about your thinking on alignment signaling.
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And you have developed this framework, which has a handy acronym.
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Tell us about what the thinking is here and how companies can apply it when they need to
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signal positions that might be as you have described a little awkward because you don't
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agree, but you need to stay engaged.
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Yeah.
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Look, so this is the beautiful thing about getting to talk to senior executives every day, right?
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I mean, something that we've always been doing forever is addressing multiple audiences.
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But I think what's different now is that in some respects, it appears that companies are
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in a spot of where it looks like they're backtracking on their commitments.
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So the challenge is, how do you signal allegiance and agreement or your participation
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with the administration without undermining your history, your relationships, your integrity
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and keeping your commitment to your core groups?
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I think that is sort of the challenge right now at the heart of it.
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And so this acronym that we came up with was all about the heart of what Alignment Signaling
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is all about.
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Access, right?
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You have to be able to stay in the room as you know, as we talked about earlier in the
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podcast, if you're not, if you don't have a seat at the table, you're probably on the
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menu.
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That's the heart of the idea here.
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So ACCESS is keeping front and central what the ultimate goal is here.
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So it's also an acronym, right?
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A: Acknowledge the environment, C: Calibrate public proximity and Contain the message.
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E: Gott engage with policy, not via personality.
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And then the two SS's: Signal stakeholder awareness and Scenario test the blowback, because there
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will be blowback.
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As we have seen. Okay, there's a couple here that I think are really interesting as we apply
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it to what we've seen this past week with both the Amazon situation as well as the
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car makers, but acknowledging the environment, I think is a really, really interesting one.
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Talk about how, I think the car makers are the best example here, but how they've demonstrated
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that aspect of your framework.
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Okay.
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So, I think this idea of acknowledging the environment is recognizing that this
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is not all good news right now.
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In a Trump 2.0 environment companies are being pulled into the spotlight pretty fast.
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The loyalties are getting tested in public and neutrality can get framed as betrayal.
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So every business decision, you got to be aware of... it can be politicized.
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So this idea here is that, acknowledging the environment, you can't pretend that the
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political climate is neutral.
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You have to name the pressure.
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And that means, inTrump 2.0, everything from pricing, the hiring, the philanthropy
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can be turned into some type of loyalty test.
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So you know, acknowledging the environment means being honest internally and externally
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about the symbolic risks you're engaging.
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And for Ford, I would say they did that fairly loud and early, you know, Farley names the
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chaos.
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He hits the cost.
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He made the environment a key part of the story.
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And GM did it very slow and cautious. Barra stayed quite early and then eased
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in with language like clarity and consistency.
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I'd say Ford named the storm and GM waited to see if the forecast was going to change.
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And so much of these calculations, I think, are about balancing how you present the issue
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because you need to maintain credibility, right?
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The easiest thing in the world, we just go all in and say whatever it takes.
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But in the long term, that's not going to go well for you, especially when you're
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in a situation like this where you know the policy is not good
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and you'd rather that it be something different.
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But I think what Ford did really well this week is they leaned into stuff that nobody could
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really argue with.
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I mean, this is one of the things about alignment signaling is that you look for the common
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ground.
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It's the basic concept.
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And you accentuate the things, you know, this, ideally there's, we have more things in
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common than we, than we differ on.
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But Ford really found stuff that I think is hard for anybody to argue with.
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The jobs that they have here, the efforts that they are making, the factories that they are
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going to add.
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So it's, it goes beyond what we've seen with a lot of companies where they say, 'we agree
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with the idea of leveling this playing field, we agree with the idea of long term boosting
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manufacturing.'
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But Ford's able to do is say, 'we're already on it.'
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Yeah.
24:52
The message that would have served them well, I think before now, but what the heck, they're
24:55
here.
24:56
Yeah.
24:57
Look, I think that's a good example.
24:58
This idea of the first calibrating public proximity.
25:02
Ford leaned in close- Fox, CNN, the whole circuit - proximity is presence.
25:07
And in contrast, right, GM kind of kept distance.
25:10
They let the earnings do the talking, used more formal channels like the shareholder
25:15
letter and semifor.
25:16
So yeah, you know, Ford stepped into the spotlight.
25:19
GM stayed behind the curtain.
25:21
You still got to decide how close you want to peer to political power and how far you need
25:28
to be seen.
25:29
And with Trump back in the arena, you know, even showing up in the wrong photo can be a headline.
25:33
So, you know, calibration largely about visibility management who's in the room who's watching
25:38
from the hallway and what your presence communicates.
25:41
Well, let's talk about one more of the letters in your acronym.
25:45
And that's the next C, which is "Containing the messaging risk."
25:48
Yeah, I think that Amazon really did a good job of this sort of reactively.
25:55
I mean, ideally, you would have contained the messaging risk by, you know, looking at this
25:59
potential proposal, but who knew that it was going to become public?
26:02
Because we don't know how fully baked that idea was.
26:06
They were very emphatic that it had not gone up the chain.
26:08
I don't know what the reality was, but talk a little bit about what we've seen in terms
26:13
of containing messaging risk this week.
26:16
So, yeah, this idea of containing the message risk means basically tightening the loop,
26:21
right?
26:22
Limit who speaks, align quickly, avoid statements that can be reframed as pledges or
26:27
attacks.
26:28
And for Amazon, they issued two statements within the span of an hour.
26:32
The first said the tariff display had been kicked around, but not implemented.
26:36
And the second slammed the door: not approved and not going to happen.
26:40
And that, that second statement wasn't just corporate cleanup, it was political containment,
26:45
right?
26:46
It wasn't aimed at clarity.
26:47
It was in a Trump and it worked.
26:49
But here's the risk, right?
26:50
In trying to kill the story fast, Amazon left a room for nuance and no signal to stakeholders
26:56
who might have appreciated the transparency.
26:59
So, you know, Amazon contained the blowback, but they also muted the message.
27:03
I think the fix worked, but the story got flattened.
27:07
I think this is a really interesting framework that you've come up with.
27:10
I'll go over it again.
27:11
You said ACCESS six letters: A- acknowledge the environment, C- calibrate public proximity,
27:17
C- contain the messaging risk.
27:20
E- engage via policy, not personality.
27:23
S- signal stakeholder awareness.
27:25
S- Scenario test the blowback. Really interesting stuff.
27:29
Any final thoughts on that framework?
27:32
If you're going to use this framework, there's certain conditions that have got to be in
27:38
place.
27:40
You got to know what your floor is, when you're not going to fall below no matter what the
27:45
pressure is. You've got to recognize that trust has earned through behavior, not crisis statements.
27:46
You got to be able to engage from policy, not personal loyalty.
27:52
I think a big one is you also, if you're going to employ the strategy, you're going to have
27:55
to make space for internal dissent within your company.
28:00
So certainly the long game anchored in values, but whatever your next move is, it's got to be anchored in
28:01
principles and you got to have the courage.
28:04
I'm going to say moral imagination to look beyond trade-offs because trade-offs is what
28:06
first comes to mind for people.
28:09
They're balancing stakeholders here and you've got to find a way to think beyond the balance
28:15
and to think about how you can transcend the conflict that is facing us during this particular
28:20
moment.
28:22
No small feat, but always, always food for thought.
28:24
Craig, I think it's a really interesting one and it's definitely something that is going
28:29
to be a lot of opportunities for comms leaders to apply in the coming weeks and months.
28:31
That's our show for this week.
28:35
We want to thank Shawn P Neal and the team at AdvoCast as well as the People Forward
28:40
Network for making our podcast possible.
28:43
If you have comments or suggestions for the podcast we'd love to hear from you, our email
28:44
address is podcast@ocrnetwork.com.
28:48
Communication Breakdown is a production of the Observatory on Corporate Reputation.
28:54
I'm Steve Dowling.
28:58
And I'm Craig Carroll. Thanks for listening. We'll be back next week.
29:02
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