Moody’s says rated Chinese firms to weather US’ import tariffs

HOUSTON (ICIS)–Moody’s Investors Service said its rated companies in China will be able to weather the US’ plan to impose tariffs on up to $60bn in annual Chinese imports, as these firms generally cater to the domestic market, the credit ratings firm said.

“Based on Moody’s initial assessment, the impact on Moody’s-rated Chinese companies would be manageable, because most of these companies rely heavily on domestic markets, and for companies exporting to the US, such exports generally account for only small portions of their total sales,” the credit ratings firm said in a statement dated 23 March.

US President Donald Trump announced on 22 March the plan to raise trade barriers on Chinese products, in what Moody’s deemed as “the most significant of a series of trade measures undertaken by the US Administration so far”.

A list of targeted products will be published by the US Trade Representative in 15 days, with a 30-day period for public comment.

China, in response to the US measure, announced plans for reciprocal tariffs on $3bn of certain imports from the US.

“The planned US tariffs specifically target high tech sectors in China, including aerospace, information communication technology and machinery,” Moody’s said.

China’s retaliatory move, on the other hand, is not expected to disrupt the supply chains of Chinese companies, the ratings firm said.

“However, the negative impact could be greater, if both the US and China significantly expand tariffs and adopt other material and broad-ranging protectionist measures,” it said.

Moody’s also warned of “indirect, second-round effects, through supply chains and the respective domestic economies, which would result in a deeper impact”.

There have been concerns about a possible trade war between the world’s two biggest economies since Trump announced on 8 March that the US will impose import tariffs of 25% on steel and 10% on aluminium. US petrochemical players deemed the protectionist move would be detrimental to the industry.