US trade policy grinds down global corporate investment

“Sands in the wheels” of global trade and capital spending: While financial markets project an image of stability, the global economy is showing deepening scars from Washington’s trade policies, with companies worldwide freezing investments and living with slimmer margins to absorb the fallout from the highest US tariff rates since the 1930s, Bloomberg reports. The economic pressure is set to intensify as another one of President Donald Trump’s tariff deadlines goes into effect this Friday.

How bad are the tariffs, actually? The average US tariff has increased to almost 13.5% from 2.5% last year before Trump took office, with that number expected to rise further to 16% after the latest agreement with the EU is implemented, according to Bloomberg Economics estimates. Tariffs act like “a tax that puts sand in the wheels of supply chains and global trade,” even if they are not as high as previously feared, Daniel Harenberg of Oxford Economics said.

Trump’s “America First” policies could cost the global economy USD 2 tn by 2027, according to projections by Bloomberg Economics. Business investment forecasts for 2026 have been lowered across all G7 nations and nearly halved for the US, Canada, Japan, and Italy specifically. Uncertainty from the trade war has led companies to delay major investments amid the highest US tariff rates in decades, and some investments that have been announced are mainly geared towards restructuring supply chains to work around tariffs, UNCTAD said in its annual World Investment Report.

Reality check: Despite Trump’s claims of a “booming” economy, tariffs continue to erode corporate net income. Treasury Secretary Scott Bessent celebrated the investment rebound as “CapEx Comeback;” however, it is largely an artificial pre-tariff surge that has since stalled.

The global macroeconomic picture stands in contrast with a rally on Wall Street pushing stock valuations to near-record highs, but the “euphoric” conditions are sparking fears of a market bubble, the Financial Times reports. The S&P 500 hit record peaks, Nvidia became the first USD 4 tn public company, “meme stocks” reappeared, and BTC rose past USD 120k. This is a “dangerous set up,” showing parallels to the dot-com boom, as investors, relieved by recent trade agreements, drive markets higher despite underlying risks,” Pimco CIO Dan Ivascyn warns.

MARKETS THIS MORNING-

It’s a sea of red in Asian markets, with Japan’s Nikkei, South Korea’s Kospi, China’s Shanghai and the Hang Seng Index all down in early morning trading as investors are in wait-and-see mode with ongoing US-China trade talks. The picture is only slightly rosier over on Wall Street, where futures indicate the Dow Jones, S&P 500, and Nasdaq will all open just barely in the green later today.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.7% yesterday on turnover of SAR 4.6 bn. The index is down 9.6% YTD.

In the green: Sport Clubs (+9.9%), SHL (+6.5%) and ACIG (+6.1%).

In the red: Teco (-9.8%), BSF (-5.3%) and Raydan (-4.1%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.8% yesterday on turnover of SAR 29.5 mn. The index is down 14.9% YTD.

In the green: Future Vision (+19.1%), Dar Almarkabah (+7.3%) and Knowledgenet (+6.8%).

In the red: Horizon Food (-10.0%), Naas Petrol (-8.5%) and Qomel (-7.8%).

CORPORATE ACTIONS-

#1- AlliedCooperative Ins. Group (Acig) is planning to raise its capital by SAR 9 mn by issuing new shares while suspending rights issue shares, it said in a disclosure to Tadawul yesterday. The move comes after the Ins. Authority obliged the company to provide a correction plan to meet the ins. companies’ minimum paid-up capital requirement of SAR 300 mn.

The details: The offering will be limited to eligible institutions and investors, subject to the approval of the Ins. Authority, the Capital Market Authority, Acig’s general assembly, and other regulatory bodies. Acig has yet to tap a financial advisor.

#2- Sabic Agri-Nutrients will distribute about SAR 1.7 bn in interim dividends for 1H 2025 at SAR 3.5 apiece, it said in a Tadawul disclosure yesterday. The distribution is slated to kick off on 19 August.

#3- Tourism Enterprises’ (Shams) board recommended a reverse stock split to increase the nominal value of its shares to SAR 10 from SAR 0.50 each, it said in a disclosure to Tadawul on Sunday. The consolidation will see the number of shares reduced to 57.8 mn from 1.2 bn without impacting the company’s total capital. The move is pending shareholders’ approval.