March 27, 2018
U.S. trade policy has risen to the top of the list of “biggest external risks” facing the members of the CNBC Global CFO Council., an elite group of chief financial officers representing public and private companies from various major sectors.
Indeed, based on a quarterly poll of the council members released on March 23, more than one-quarter (27.3%) say U.S. trade policy is now the biggest risk their companies face. That’s up from 11.6% in the fourth quarter of 2017, outranking other threats that have recently ranked high among business concerns, including “threat of cyber attack” and “consumer demand.”
The CNBC Global CFO Council represents some of the largest public and private companies in the world, collectively managing more than $4.5 trillion in market capitalization across a wide variety of sectors.
The survey was conducted after President Donald Trump signed a pair of proclamations that impose tariffs on imported steel and aluminum, but before the announcement on March 18 that the United States will seek trade penalties of up to $60 billion against China for intellectual property theft.
The chief financial officers voiced strong opposition to metals tariffs, especially in the broader context: potential retaliatory moves taken by other countries. “The impact direct from steel/aluminum tariffs would be negligible,” said one CFO respondent. “The indirect impact from retaliation could be significant.”
Almost two-thirds of respondents (65.8%) say the tariffs will have a negative impact on their companies, and even more (86.9%) say they will have a negative impact on both the U.S. and Chinese economies.
The CFO Council’s outlook for GDP has been downgraded amid the increased tariff fears, including in three key global economies. Canada, China and Japan were downgraded from “improving” to “stable” by CFOs.
Still, the United States was rated as “improving” for the seventh straight quarter, while the Euro zone was seen as “improving” for the fourth straight quarter. No region was seen as worse than “stable,” a trend that has now held for five quarters.
Research contact: @DavidSpiegel