Clang, Clang, Clang Goes the Sound of Tariffs

(Bloomberg) --

Earnings season is just heating up but a few companies with big stakes in the global economy are already waving some caution flags. Here are a few of the latest warning signs:

• The chief executive of U.S. railroad company CSX Corp., explaining a weakened sales forecast, called the economic backdrop “one of the most puzzling I have experienced in my career.’’
• Alcoa Corp. had disappointing news about global aluminium demand and Volvo Cars cited tariff headwinds, too. Agribusiness giant Cargill Inc. has already posted the steepest profit decline in four years.
• The Federal Reserve's latest regional report offered little evidence that U.S. companies are winning the trade war. The number of references to “tariffs’’ in the Beige Book continued to increase to 49 from 37, according to Morgan Stanley. The word “uncertainty’’ appeared 30 times versus 19 in early June.
• The value of Japanese exports dropped for a seventh straight month in June, with semiconductor components and auto parts among the biggest drags. That bodes ill for the world's third-largest economy as it tries to maintain momentum before a consumption-sapping sales tax increase in October.

Charting the Trade War

Swiss exports from April through June were little changed from a year earlier, but a closer look a figures released Thursday showed exports of machines declined in the period for a fourth quarter running.

Today’s Must Reads

• Spinning wheels | The U.S. and China show few clear signs of returning to the negotiating table as Trump waits for Beijing to buy American crops and Xi seeks relief for Huawei. 
• View from Paris | Stephanie Flanders, the head of Bloomberg Economics, speaks in her latest podcast with French Finance Minister Bruno le Maire about trade and capitalism.
• Tough negotiations |  Post-Brexit trade talks between the U.K. and U.S. won’t be quick or easy, according to Boris Johnson, the favorite to succeed Theresa May as British prime minister.
• Slowdown ammo | Group of Seven officials meeting near Paris confronted an outlook of slowing growth and limited ammunition for them to use to counter trade tensions.
• IMF raises alarm | Prolonged trade uncertainty is weighing on business sentiment and affecting global demand, IMF Chief Economist Gita Gopinath said in fresh call for calm.

Economic Analysis

• Global value chain | China may lean on higher-value exports to blunt trade war impact
• Shanghai Port | Revenue may have held steady despite U.S.-China trade tensions.  

Coming Up

• July 21: South Korea trade data
• July 23-24: WTO General Council meeting

--With assistance from Catherine Bosley and Fergal O'Brien.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, David Goodman

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