As the United States teeters on the brink of a tit-for-tat trade war with China and a growing number of allies, President Donald Trump’s insistent push for policy changes is causing a full-swing rattle in global markets and among business leaders.
Seven of the 16 biggest Dow declines this year appear to have been sparked by trade concerns, according to CNBC data. There have been 35 moves of 1 percent or more in the Dow Jones Industrial Average this year, 12 of which CNBC found were entirely or substantially related to trade-related news. Although the blue-chip index snapped an 8-day losing streak on Friday, the roller-coaster ride in global markets has shaved $700 billion in market cap off the index.
Trade uncertainty has risen to be the biggest risk for corporations, according to the latest CNBC Global CFO Council quarterly survey. To that point, 35 percent of global CFOs say U.S. trade policy is the biggest external risk their company faces, up from 27 percent in Q1 and tripling from the 11.6 percent who cited trade policy in the fourth quarter of 2017.
It is going to be a tough six months
Amid strong gross domestic product and job growth and profit-friendly corporate tax cuts, nearly 65 percent of North American CFO respondents said U.S. trade policy is likely to negatively impact their firms over the next six months; 20 percent of CFOs indicated the impact would be “very negative.” Sixty-six percent of Asia-Pacific region CFOs expect a negative impact on their firms.
“What is interesting is business leaders as well as investors don’t like uncertainty, and I think we are being exposed to an abnormal amount of sausage-making in the process,” said MongoDB CFO and CNBC Global CFO Council member Michael Gordon on CNBC’s Worldwide Exchange earlier this week.