A new survey reveals that most American executives see their businesses gaining from a potential increase in tariffs with China than being hurt by it, according to Bloomberg.
Around 59% of approximately 500 firms surveyed during Q4 of last year say they expect profits to benefit under new tariffs on imports – more than double the number who saw a negative impact, according to a UBS Group AG survey released this month. A domestic investment boost was listed as a key beneficiary tariffs negatively impact the cost of doing business abroad.
The survey separated firms by four categories and found that larger companies were more optimistic than smaller firms.
“Executives may be overly optimistic but this does support our view that tariffs create the potential for both winners and losers,” said chief US equity strategist Keith Parker in a Monday note.
The stock market has been dancing to the tune to trade talks as investors monitor efforts from the world’s two largest economies to prevent an escalation with the March 1 deadline approaching. If there’s no deal by then, President Donald Trump has threatened to more than double the rate of tariffs on $200 billion in Chinese imports.
Companies are getting ready for a lapse in negotiations. In the UBS survey, 75 percent of respondents said they have already taken at least one action in response, such as raising prices to offset higher costs, shifting supply chains and pulling orders forward to get ahead of potential tariffs. –Bloomberg
Bank of America has been tracking comments made by S&P 500 companies on the trade impact, and found that half of them have suggested their business would be hurt by tariffs. That said make of them have accounted for the potential hikes “for conservatism,” accortding to strategists led by Savita Subramanian.
Such moves are “suggesting some upside risk if more amicable resolution is reached,” the strategists wrote in a note Monday. –Bloomberg
While some have voiced their concern that tech and industrial stocks are likely to be hit the hardest by growing trade tensions, executives seem to have a less dramatic view of things – reporting that they expect better profit margins helped by higher prices and demand due to a likely boost to investments.
Energy industry execs were the most negative.
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