Lenders may turn more risk-averse and seek higher premia.

Asia Pacific credit conditions are expected to be more volatile in 2025 due to uncertain trade and foreign policies by the incoming Trump presidency, reports S&P Global Ratings.

Compounding obstacles could push lenders to turn more risk-averse and seek higher premia.

More US tariffs against Chinese exports could slow down China’s export growth driver, said Eunice Tan, head of Asia-Pacific Research at S&P Global Ratings.

“A slower China and softer global trade will squeeze revenue and growth for export-centric Asia-Pacific,” Tan warned.

Wider tariffs and intensifying geopolitical tensions could hit energy prices and supply chains. The ability of companies to pass through costs is uneven.

Countries with a large trade surplus with the U.S. (Vietnam, Thailand, Malaysia, and India) could be vulnerable to universal tariffs.

The global trade slowdown could curb growth and the revenue of Asia-Pacific exporters, Tan warned.

APAC’s growth is expected to slow to 4.2% in 2025 and 4.1% in 2026.

“If tariffs prompt U.S. inflation to resurge, the Fed may slow its monetary easing. Asia-Pacific central banks could keep rates high to limit outflows. A strong U.S. dollar, narrower offshore funding access, and costlier interest pose strains,” Tan said.