Moody's Warning: US Tariffs Threaten Global Economic Stability

Moody's Ratings reported that US tariffs may worsen credit conditions, increasing default risks for low-rated companies. Unpredictable trade policies will slow growth, potentially triggering a recession. The financial markets are shocked, affecting consumer confidence and corporate planning. US consumers are expected to bear the cost of tariffs, squeezing profit margins.

US tariffs have been labeled a potential threat to global economic stability by Moody's Ratings. The agency highlighted that low-rated and speculative-grade firms are particularly vulnerable due to their dependence on debt markets.

Moody's pointed out that, while a temporary 90-day pause on most tariffs could offer businesses time for adjustment, the continuing uncertainty presents pressing challenges. Increased tariffs are anticipated to hit American consumers and businesses hard, reducing growth by at least one percentage point.

The agency's report also emphasizes the severe implications for China's export sector amid ongoing US-China trade tensions, warning that the country's growth could dip below 4% if domestic consumer sentiment remains unaddressed.

(With inputs from agencies.)