President Donald Trump’s tax reform — signed into law late last year — was a boon for the stock market, but his tough trade stance is pressuring stocks so far in 2018.
According to CNBC, seven of the 16 largest Dow Jones Industrial Average (DJIA) declines this year were spurred on by worries over trade. What’s more, based on CNBC data, there have been 35 moves of 1 percent or more in the DJIA this year, 12 of which were either entirely or substantially due to trade news. The seven declines in the DJIA removed $700 billion in market capitalization of the index.
In addition, CNBC said trade uncertainty has increased to become the largest risk for companies. That’s based on a CNBC Global CFO Council survey it conducts each quarter. The report noted that 35 percent of global CFOs said the U.S. trade policy is the largest risk externally that companies face. That is up from 27 percent in the first quarter and 11.6 percent from the fourth quarter of last year.
“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.
The survey also found that close to 65 percent of North American CFOs said the U.S. trade policy will have a negative impact during the next six months, while 20 percent said the impact will be very negative, and 66 percent of Asia-Pacific-based CFOs said the U.S. trade war will impact their business. Despite the negative views on the trade policies of President Trump, CFOs in North America said the full benefits of Trump’s tax cuts are still in place, although 40 percent said that uncertainty around trade is hurting the chances for companies to take full of advantage of tax reform.