Tariffs, Iran sanctions stoke CEO worries of global slowdown

Trade war concerns, the prospect of rising interest rates and the U.S. withdrawal from the Iran nuclear deal are all stoking fears among corporate chiefs that the current global economic boom can't be sustained, a new survey from Oxford Economics shows. 

About two-thirds of the survey respondents say the risk of a "sharp slowing in global growth" has climbed in the past three months. That's the biggest such shift in more than two years, noted Jamie Thompson, the head of macro scenarios for Oxford Economics. Just 10 percent of the executives surveyed see a chance of a "sharp pickup."

"A trade war remains the biggest downside concern," Thompson wrote.

European leaders are pulling together to stem the potential economic consequences of being on the wrong side of the U.S., the world's biggest economy, when it comes to renewed sanctions on Iran, the Wall Street Journal reported. Whatever steps Europe comes up with may have limited effect, the Journal reported. That makes for heightened global unease

"U.S.-E.U. relations are likely to be further aggravated in the coming month," Eurasia Group analyst Charles Lichfield wrote in a note Tuesday.

Add to the mix steel and aluminum tariffs imposed by the Trump administration earlier this year: E.U. countries were among those granted a month-long exemption, which ends June 1. 

Plans for counter-tariffs against U.S. targets have already been bandied about in public. Eurasia Group now estimates a 60 percent chance the tariff exemption won't be extended to Europe and the possibility of "a new low in Transatlantic relations."

"The E.U. is now operating on the assumption that its exemption from U.S. tariffs will end on 1 June; the European Commission is preparing a robust response," Litchfield reported. "U.S. and E.U. interests remain closely aligned in many areas but the two sides will no longer assume that they are working together in good faith."

Meanwhile, there is growing evidence that $50 billion in proposed tariffs on China from the Treasury Department, due May 21, are starting to weigh on some U.S. businesses. So far, China has only matched smaller opening rounds of tariffs, like on steel, in a tit-for-tat. 

Another monkey wrench may come from the U.S.'s own backyard: negotiations resumed this week for the North American Free Trade Agreement.

The Oxford survey involved 128 companies with about 5 million employees and $2.5 trillion in revenue. Trade was listed as the "single biggest downside risk" at 41 percent, up from 27 percent three months ago, according to the survey.

The U.S.'s withdrawal from 2015's Iran nuclear deal was announced Tuesday by President Trump.