Banking titan HSBC warns of escalating trade turbulence in US-China relation, signaling a notable decline in trade exchanges between the two nations due to Trump's tariff policies.
HSBC issued a warning about increased economic uncertainty and a notable drop in trade between the US and China as Donald Trump's ongoing trade war persists. Georges Elhedery, the bank's boss, stated that the President's tariffs are causing a "reconfiguration" of the global economy and even resulted in a "slowdown in the trade activity between the UK and US."
Sam Woods, the head of the Bank of England's regulatory authority, expressed concerns, noting that the fallout from Trump's imposed tariffs is far from over. "We consider ourselves to be still in the middle of this thing," Woods said.
Elhedery's remarks came as HSBC reported a 25% decrease in first-quarter profits to £7.1billion, primarily due to one-time costs. The bank also reported an "expected credit loss" provision of £650million, including £110million to account for heightened uncertainty. A further deterioration in the trade war could lead to an additional £370million in losses.
Concerns about further economic downturns, with potential consequences for sectors like the car industry, retail, clothes makers, transport, and logistics, have arisen. A HSBC spokesperson commented that the volatile economic environment and market uncertainty would likely keep demand for lending subdued in 2025.
Based in London and Hong Kong, HSBC is directly impacted by the trade war. The bank has experienced a significant drop in trade volumes along the US-China corridor due to tariffs. Moreover, Elhedery expressed optimism about trade negotiations and the importance of maintaining the U.S. dollar as the global currency of choice amidst a sharp fall in its value during recent turbulence.
Elhedery was critical of Britain's ring-fencing rules, highlighting that they have become redundant and increase costs and competition stifling. With Chancellor Rachel Reeves indicating a desire to reduce red tape, this salvo is likely to be noticed by those in the Treasury.
In summary, the ongoing trade war between the US and China is causing significant concerns for global economies, including the UK. HSBC's profits will be influenced by the evolving trade policies, and its exposure to industries affected by tariffs. Moreover, the bank's Asia-Pacific operations may face headwinds from slower regional growth and supply-chain realignments.
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- The ongoing trade war between the US and China is likely to cause a deterioration in the general-news landscape, triggering concerns for businesses such as HSBC, which has reported a significant drop in trade volumes along the US-China corridor due to tariffs.
- HSBC's boss, Georges Elhedery, has stated that the President's tariffs are causing a reconfiguration of the global economy and resulting in a slowdown in the trade activity between the UK and US.
- Elhedery's remarks came as HSBC reported a decrease in first-quarter profits, with a further deterioration in the trade war causing an additional £370million in losses.
- The volatile economic environment and market uncertainty are likely to keep demand for lending subdued in the future, as pointed out by a HSBC spokesperson.
- Donald Trump's tariffs are not only affecting the banking sector, but also other industries such as car industry, retail, clothes makers, transport, and logistics, which may experience a slowdown due to the increased economic uncertainty.
- Elhedery has expressed optimism about trade negotiations and the importance of maintaining the U.S. dollar as the global currency of choice amidst a sharp fall in its value during recent turbulence, highlighting the significant role finance plays in international business and politics.
