US tariffs are weakening credit conditions, says Moody’s

New Delhi: Moody’s Ratings on Wednesday said the US-imposed tariffs will weaken credit conditions and raise default risks, especially for low-rated and speculative-grade corporates.
These ongoing impositions will have a major impact on global credit conditions and might lead to a possible recession, the media reported.
Non-financial corporations are the most at risk from tariffs. Low-rated, speculative-grade companies will be affected by their reliance on debt markets.
On April 9, the US administration authorized a 90-day pause on the implementation of most reciprocal tariffs, reverting to a universal rate of 10 percent on almost all targeted countries while raising tariffs on most goods from China to 145 percent. On April 16, the US further hiked tariffs on exports from China to 245 percent.
While the tariffs have shocked financial markets, they are raising the risks of a global economic recession, which will impact the businesses and consumer confidence.
The agency stated that the pause will generate a lack of clarity on the tariff regime.
Credit has deteriorated sharply over the last month in the wake of heavy tariff imposition. The escalating China – US rivalry will be a major geopolitical challenge for the global economy .
Domestic constraints, particularly arising from already weak consumer sentiment, indicate that the government may not be able to muster enough support to offset the impact of tariffs, without which the country’s growth could slip to 4 percent or less this year.