Moody’s has issued a warning that the U.S. import tariffs may have indirect consequences on sub-Saharan African banks, primarily through macroeconomic channels, with a particular emphasis on a potential slowdown in China. Although African banks are not the direct targets of U.S. tariffs, a decrease in demand from China, a crucial export market for African commodities, could result in lower export volumes and prices. This scenario could ultimately lead to a reduction in trade-finance fees for banks, thereby affecting their revenue streams. Furthermore, the increased risk aversion among investors may widen dollar-bond spreads, causing refinancing costs to rise for banks that heavily rely on wholesale hard currency funding. Moody’s identifies these as significant “second-round effects” of the ongoing global trade tensions.
