New Delhi [India], November 15 : The global credit conditions are increasingly at risk due to rising geopolitical tensions, says a report by Moody's.
The report identified geopolitics as the main threat to global credit stability, with escalating economic and political friction between the United States and China as a central concern.
It highlighted that the Trump's new proposed tariffs, if implemented, could disrupt global trade even further, depending on their scope and application said, "New tariffs proposed by President-elect Trump would be much more disruptive depending on how they are implemented".
The report noted that the relations between the two economic superpowers have worsened since 2019, when then-President Donald Trump imposed tariffs and trade barriers against China during his first term.
It said, "Economic relations between the US and China have deteriorated since President-elect Donald Trump raised tariffs and trade barriers against China during his first term in 2019"
Adding to the strain, the report mentioned that China's expanding trade surplus since the COVID-19 pandemic could intensify trade tensions with the U.S. As China's surplus grows, it could trigger additional retaliatory measures from the U.S. aimed at balancing trade between the two nations.
It added "The risk of additional trade restrictions has risen as a result of China's growing trade surplus and resulting imbalances with the US".
Beyond tariffs, the report expected even stricter investment restrictions and tougher rules of originpolicies that define the source of goodsfurther complicating international trade.
The report mentioned that these actions could have ripple effects in regions and industries heavily reliant on trade with China. Latin America and Asia-Pacific countries, in particular, are likely to feel the pinch.
These regions have increasingly served as intermediaries or "connector countries" in global trade, but their strong ties to China could make them vulnerable to new restrictions.
The report also noted that governments and businesses globally are already working to build resilience to the related uncertainty by diversifying supply chains, but the unpredictable nature of geopolitical developments will lead to further shocks that both will need to respond to.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor