Trump’s Trade Wars Have U.S. Exporters Cutting Power Demand

(Bloomberg) -- President Donald Trump’s trade wars are not only affecting companies that produce America’s exports, but are also cutting into the profits of the utilities that power them.

Earnings at American Electric Power Co., which provides electricity in 11 states, slumped 13% in the second quarter. Chief Executive Officer Nick Akins said the “biggest economic headwind” was the Trump administration’s trade policies. Shares were down 0.7% at $88.98 at 1:38 p.m. New York time.

AEP isn’t the only utility to note a sales slump for its industrial customers. FirstEnergy Corp., which owns utilities in Ohio and Pennsylvania, said Wednesday that demand in that sector dropped 1.7% due to lower use from steel and automotive makers. The company didn’t identify trade barriers as a reason for the drop, but said the closing of an auto plant in its service territory was a factor.

The trade disputes have “impacted export manufacturers in our service territory,” AEP’s Akins said on a conference call Thursday.

His comments come as U.S. exports are down the most in three years, thanks to a broad decline in international demand for American products. Trump’s trade policies have spurred tit-for-tat tariffs, thrown global markets into turmoil and made it harder for manufacturers to make long-term planning decisions.

AEP said sales to industrial customers fell 2.7% in the second quarter from a year earlier, a bigger decline than it reported for residential and commercial customers.

“Sales to the industrial class have been slowing in recent quarters as the impact of the strong dollar and more restrictive trade policy have challenged export manufacturers,” AEP Chief Financial Officer Brian Tierney said on the call.

--With assistance from Mark Chediak.

To contact the reporter on this story: Will Wade in New York at wwade4@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Pratish Narayanan

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