Will there be tariffs? Won’t there? If there’s one certainty about US president Trump’s strategy on imposing tariffs on American imports, it is the uncertainty attached to the strategy, such has been the level of see-sawing since his announcement on 2 April, his so-called Liberation Day.
When treasurers gathered at the ACT’s Annual Conference, multiple angles on how to navigate the Trump era, from understanding the new geopolitics to managing risk, were discussed.
That was days before the Court of International Trade had seemingly derailed the tariffs, arguing that Trump had wrongly used emergency powers to unleash the tariffs. But with the White House appealing the decision, the yo-yoing is set to continue.
In a session at the ACT event called Tariffs and geopolitics: what the changing global trade landscape means for treasurers, Vivek Ramachandran (pictured above, left), general manager and head of global trade solutions at banking giant HSBC, which hosted the panel, set the tone.
He said the imposing of tariffs “has forced everyone to rethink the basics and what their business model looks like, what bets take place and how they describe their business”.
Richard Crump, MD of Pelican Engineering, one of the UK’s biggest bus makers that has seen turnover rise tenfold in the last decade to £230m, discussed how the firm is managing currency risk in the fast-changing environment.
Tom Bindloss (pictured above, centre), director of treasury at Senior – which provides engineering for the aerospace and defence sectors, discussed the effect on its complex supply chain across 14 countries. Bindloss expressed the importance of transparency and resilience in supply chains and the need for scenario planning to address the turmoil.
Managing credit risk in a Trump 2.0 world, a session hosted by credit agency Fitch Ratings, picked up the thread. Josef Pospisil, deputy head of corporate ratings EMEA at Fitch, said the turmoil didn’t just impact corporates directly, but more broadly “led to management distraction and delayed decisions”, which also in turn hit economic growth.
Chris Chambers (pictured below, second from left), group treasurer at Wessex Water, said the current environment posed a risk to businesses implementing new projects, while Ian Cooper (pictured below, second from right), group treasurer at investment firm 3i, talked about the potential for a gradual “dedollarisation”.
Declan Doorly, head of group treasury at Irish energy-focused services group DCC, said in the current uncertainty he was focused on currency hedging in light of the euro strengthening against the dollar. But Chambers also told everyone that “every challenge is an opportunity”.
Mark Venner, treasurer operations at defence industry giant BAE Systems, said one of the biggest challenges at the moment, was the level of uncertainty which made it harder to “give the correct answer” when the environment is changing so quickly.
He was speaking at a session called Navigating markets in volatile times, facilitated by James Winterton, policy and technical associate director at the ACT.
James Murphy, global head of markets treasury at HSBC, and Veronica Iommi, secretary general of the Institutional Money Market Funds Association (IMMFA), also on the panel, offered guidance that there were plenty of tools available to address risk.
And Simon Dolan, senior manager, sterling markets, at the Bank of England, said in this context, it was vital that the UK’s central bank “was not complacent... that it uses its balance sheet effectively... and stays close to the market”.
Lawrie Holmes is a freelance business and finance journalist