Fitch Ratings wrote in a short note on April 16 that the tariff war could add risk to some commercial banks in Asia Pacific, including South Korea, Taiwan and Thailand.
Fitch Ratings previously forecasted relatively stable operating conditions across most Asia-Pacific (APAC) banking systems for this year. However, a rise in U.S. tariffs now poses a potential challenge to this expectation in certain markets. The specific consequences of the ongoing trade conflict on regional banking systems will hinge on the final tariffs imposed, their influence on local economic growth, banks’ exposure to high-risk sectors, and any shifts in fiscal, monetary, or credit policy.
Presently, Fitch Ratings maintains Neutral outlooks for the banking sectors in South Korea, Taiwan, and Thailand for 2025. Yet, these could be downgraded to Deteriorating if there are significant additional increases in U.S. tariffs surpassing the 10% tariff introduced on April 2 on all U.S. trade partners, or if the detrimental impact on their economies proves greater than forecasted. Such a scenario could materialize if the U.S. proceeds with the suspended higher country-specific “reciprocal tariffs” or imposes steeper tariffs on key sectors like electronics, including semiconductors.
