The tit-for-tat trade tariffs being imposed by the U.S. and China governments and European Union are likely to dampen capital spending by U.S. companies in 2018 and lead to a decline in spending in 2019 that may mark an inflection point in the late-stage business cycle.

That’s the view of Fitch Ratings in a report published Thursday, that warns that U.S. manufacturing activity will be hurt by the current tensions.

“The escalation of the US-China trade dispute and the notable absence of constructive negotiations point to a continuation of trade-related uncertainty for U.S. businesses through the second half of the year,” said Fitch Group Credit Officer for U.S. companies, Bill Warlick, lead author of the report.

Fitch is expecting about 3% growth in aggregate capital spending in 2018, half the 6% growth recorded in 2017. The rating agency expects that rate to swing to a negative 0.8% in 2019, amid warnings of changing business strategies and delays in capital projects.

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Fitch noted the raft of big U.S. companies that have been vocal on the risks posed by tariffs, including General Motors Co. GM, -0.78% , which has said they would raise the prices of its cars, hurt its global competitiveness and lead to the loss of U.S. jobs. Harley-Davidson Inc. HOG, -0.77% has said it would move production of motorcycles intended for EU markets out of the U.S., as otherwise, it will add an average of $2,200 to the cost of each bike transported to the region.

That news drew a strong rebuke from President Donald Trump, who threatened “to tax the iconic company “like never before.”

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Brown-Forman Corp. BF.A, -0.60% , the maker of Jack Daniel’s whiskey, one of the products that the EU and Mexico have threatened with tariffs, said on its last earnings call that the uncertainty was making it tricky to make forecasts.

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“Comments by companies across various sectors, including electrical equipment, appliances and components, and food, beverage, and tobacco, were noted in the Federal Reserve’s June meeting minutes and the Institute for Supply Management’s (ISM) Purchasing Manager survey,” said Fitch. “This reflects broadening concern over the influence trade-related uncertainty is having on business sentiment and growth plans.”

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The second-quarter earnings season that just started has heard little of tariffs as yet, but that’s mostly because the first reporters are banks and regional banks and big manufacturers and multinationals have yet to release their numbers and host calls.

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Meanwhile, the tax revamp that was signed into law in December, instead of spurring companies to invest in growth or raise wages for their workers, has led to a flood of share buyback and dividend announcements instead.

U.S. companies are on track to deliver $700 billion to $800 billion in buybacks in 2018, according to UBS in a recent note. Buybacks were up 53% in the first quarter, and announced buybacks are up 83% so far in 2018, as MarketWatch’s William Watts has reported.

Add in an expected $500 billion in dividends and companies will return more than $1 trillion to their shareholders.

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U.S. economic indicators are still showing strong business sentiment and expanding manufacturing activity, said Fitch. Eurozone PMIs also signal expansion, although they have declined steadily since the beginning of the year.

The Institute for Supply Management said it June U.S. PMI reading was driven by expansion in new orders, production and employment. But “inventories continue to struggle to maintain expansion levels, as a result of supplier deliveries slowing further,” said Fitch. “Labor constraints and supply chain disruptions continue to limit full production potential and price increases across all industry sectors remain on the rise.

“Additional rounds of tariffs could place further upward pressure on input costs, disrupt supply chains and weaken manufacturing activity in the near-term,” said the agency.

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