(14 April 2025 – Global) Unpredictable US tariff changes will disrupt corporate supply chains, hinder economic growth and dent corporate earnings Fitch Ratings reports, , despite a 90-day freeze on larger tariff hikes announced on 2 April.
Effective tariff rates on US-China trade have been raised much further than anticipated following retaliatory actions on both sides, and are not yet subject to the 90-day pause. Coupled with the minimum ten percent tariff that remains in place on all Asia Pacific (APAC) exports to the US, as well as various other sector-based tariffs, will hurt APAC companies that sell to the US and Asia’s export-oriented economies.
Fitch’s rated APAC corporates that have significant US exposure generally have moderate to high rating headroom, offering some buffer to manage tariff uncertainties.
“Companies in APAC would be vulnerable if the US eventually implements the 2 April tariff hikes in full. Exports from Vietnam, Thailand, Indonesia, Taiwan, India, South Korea, Malaysia and Japan could face much higher US tariffs that would hurt their economic growth and dim corporate earnings prospects” commented Ying Wang, Fitch Managing Director, Corporates, APAC.
“Secondary effects from sharp US tariff increases under such a scenario could pose a threat even to companies with rating headroom, as regional and global growth would likely be significantly lower than we had anticipated” states Steve Durose, Fitch Managing Director, Corporates, APAC.