Recent developments in the global trade environment have been coming hard and fast. First, there’s the possible end, or significant renegotiation, of the North American Free Trade Agreement (NAFTA). Then, U.S. steel and aluminum tariffs have raised fears of a potential U.S. trade war. On top of this, political risk has risen in the United States and around the world in places as disparate as Italy and South Africa.
At times like these, when volatility is rising, middle-market companies that trade with overseas partners should pay close attention to foreign exchange risk, something most executives ignore in tranquil times.