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A top banking CEO from Europe warned that his clients are starting to feel the impact from global trade tariffs, with production lines being changed and profit warnings being issued.
"We see clients looking to reorganize their value chains. We are making sure that either they are not caught by higher tariffs or moving their production or basically rerouting value chains through which they make their products," Ralph Hamers, the chief executive officer of Dutch bank ING told Annette Weisbach on the sidelines of the Handelsblatt banking conference in Frankfurt.
Hamers added that some customers have indicated their sales will go down, their costs will increase and therefore their products may not be as competitive.
"It is very clear that a trade war is not good for producer confidence to invest and for consumer confidence to consume. It already has (had) a negative impact on economic growth."
Businesses around the world have been nervous as the current trade spat progresses. Last week, the U.S. and China slapped tariffs on $16 billion worth of goods on each other. Both countries also imposed tit-for-tat levies on $34 billion worth of goods in July.
Market watchers are now eyeing a fresh round of U.S. tariffs on $200 billion worth of Chinese goods expected later this year.
Meanwhile, other risk factors such as Brexit — the U.K.'s vote to exit the European Union — have also kept investors cautious, especially the uncertainty surrounding the timing and nature of the deal.
Hamers, however, reassured that at the moment there doesn't seem to be any detrimental effects from Brexit.
"(The) U.K. economy is growing pretty well, employment is also improving there. (The) European economy is also growing pretty well. Clearly, probably closer to the deadline, maybe some volatility coming but I truly hope that there is common sense with the politicians in order to get the deal." Hamers said.
The U.K. voted in June 2016 to leave the EU, but the process to leave the bloc has proven long and rich in technical details. The departure date has been scheduled for March 29 next year — meaning that negotiators have about six months to conclude negotiations on aspects such as the movement of people and goods across the border between Northern Ireland and the Republic of Ireland.