Moody's: US tariffs manageable for rated Chinese firms

LONDON

The U.S. plan to impose tariffs on Chinese imports and China's planned reciprocal tariffs would have a limited effect on Moody's rated Chinese companies, said the agency on Friday.

The impact on Moody's rated Chinese firms would be manageable, as most of them rely heavily on domestic markets, and for companies exporting to the U.S., such exports generally account for only small portions of their total sales, according to a Moody’s note.

Moody's also said that the planned Chinese tariffs on U.S. imports are unlikely to disrupt the supply chains of Chinese firms.

“The planned U.S. tariffs specifically target high-tech sectors in China, including aerospace, information communication technology machinery. Accordingly, the immediate impact could be material only to the manufacturers and suppliers in these sectors, with sizeable exports to the US market,” said the note.

“However, the negative impact could be greater, if both the U.S. and China significantly expand tariffs and adopt other material and broad-ranging protectionist measures. In addition, there could be indirect, second-round effects, through supply chains and the respective domestic economies, which would result in a deeper impact,” it added.