If a trade war breaks out, it would have major consequences for global GDP growth, but Olam’s business model has placed the company in a stable position, the CEO of the global agri-business told CNBC.
“I think there will be serious implications because it reduces the contestability of global trade, and global trade is a leading indicator to global GDP growth,” Sunny Verghese, the CEO of Olam International told “Squawk Box,” on Tuesday.
Reducing contestability — the openness of a marketplace to new entrants — of global trade through tariffs or tit-for-tat measures would hit trade and GDP growth, according to the CEO. Still, he added, tariffs might not be enacted in the end because there are no winners in that scenario.
Global trade can expect serious headwinds in the case of the tariffs pushing through, and while the agricultural industry will be impacted, Olam’s diversification has placed it in strong standing to deal with the potential fallout, the CEO said.
“That is the reason we are in 72 countries, and we are also participating very intensely in domestic trade in all of these countries,” Verghese said. As a result of not relying wholly on the export trade flow, he added, the company is quite “well hedged,” to deal with the aftermath of any tariffs or trade war.