LIVE MARKETS-Look out for price hikes as US firms juggle Trump's tariffs

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LOOK OUT FOR PRICE HIKES AS US FIRMS JUGGLE TRUMP'S TARIFFS

U.S. service providers and manufacturers alike expect to increase their selling prices that could support profitability in the next 12 months, a survey by S&P Global found.

Profitability growth is expected to be at its slowest since October 2023, hit by sluggish consumer demand and reduced margins.

These costs, driven by an unstable labor market and President Trump's tariffs, are expected to be passed onto consumers, and in turn could ramp up consumer inflation.

However, manufacturers were more upbeat than service providers about the longer-term impact of U.S. trade protectionism policies, that have been disrupting global trade order, the survey showed.

About 42% of surveyed manufacturers expect Trump's rattling tariffs to stimulate re-shoring of manufacturing activity to the U.S. and a "upturn" in industrial activity driven domestically, over the next 12 months.

"Those with strong international trade links still remain concerned about the possibility of price rises, supply-side disruption and the possibility of a weaker global economy," said Paul Smith, economics director at S&P Global Market Intelligence.

A final reading of S&P's manufacturing PMI last week showed manufacturing activity nudged up to 49 in June from a six-month low in May. It was the fourth month in which it stayed below 50, indicating a contraction in the sector.

However, any results are yet to be seen as the tariffs are expected to come into effect on August 1, a deadline that has been revised twice with multiple tariff pauses that have led investors to take the duties in stride.

(Purvi Agarwal)

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