(1 May 2025 – Hong Kong) Tariffs from the damaging US-China trade war emerged as a key focus in HSBC’s strong financial results, reflected in an increase in credit provisions in anticipation of mounting headwinds.
As global commerce reaches a pivotal moment, understanding the implications of tariffs is more crucial than ever. US President Donald Trump has imposed cumulative tariffs of 145 percent on all Chinese goods with as high as 245 percent rates on certain products. Trump and his aides have reportedly suggested that trade negotiations are underway while China has repeatedly denied the claims. HSBC’s recent webinar explored the legal ramifications of the latest tariff developments and their effects on international trade. Key takeaways included:
– The new normal
– Potential tariffs to come
– How to mitigate tariffs
– How to recover tariffs
HSBC notes that while its strategy remains unchanged, it admits that the external environment is now more uncertain and it has assessed plausible downside scenarios that model significantly higher tariffs, and related impacts on growth, policy rates and inflation on our earnings. In total, the term “tariffs” appeared 28 times in HSBC’s Q1 earnings release, indicating the significant attention being placed on the trade war.
HSBC increased its credit provisions (expected credit losses or ECL) by US$200 million year-on-year to US$900 million in Q1 2025.
“The macroeconomic environment is facing heightened uncertainty, in particular from protectionist trade policies, creating volatility in both economic forecasts and financial markets and adversely impacting consumer and business sentiment” the bank said in a statement.
“Supporting our clients through this volatile period is our top priority. The Group is well-positioned to manage the impacts of these challenges through our high quality revenue streams, conservative approach to credit risk and strong deposit franchise. The broader impacts of the current conditions are more difficult to quantify, and we will continue to monitor these as we formulate our ongoing outlook.”