A prolonged U.S. trade war with China and Europe would dent global economic growth and force investors to reassess the profitability of U.S. companies, some of the biggest hedge funds and private equity investors in the United States warned at an investment conference on Wednesday.
Hedge fund manager Kenneth Griffin, who runs $30 billion Citadel, said at the CNBC Institutional Investor Delivering Alpha Conference that tariffs are “damning to consumers, to companies, and to capital formation.”
Earlier this month the United States and China slapped tariffs on $34 billion of each other’s imports in an escalating trade tussle that has roiled financial markets. The United States has raised the stakes in the dispute, threatening to slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.
Griffin and the other investors sounded a nervous message on U.S. trade policies as many big investment firms this month prepare to release quarterly earnings reports that could eventually be impacted by the growing friction.
Howard Marks, co-chairman of $121 billion Oaktree Capital Group Llc (OAK.N), said tariffs and trade wars are now “real issues” a mere eight months after no one listed them as key problems for investors.
And Jonathan Gray, president and chief operating officer at $449 billion Blackstone Group LP (BX.N), said trade tensions, particularly with China, pose “risks for all of us as investors.”
The money managers all spoke at the conference on Wednesday, two days after Laurence Fink, who runs $6.3 trillion investment firm BlackRock, warned that deepening trade friction could sufficiently unnerve investors to send markets tumbling as much as 15 percent.
U.S. President Donald Trump is largely perceived on Wall Street as a pro-business leader but his hard-line stance on trade could jeopardize economic gains created by his tax cuts, investors said.