Moody’s indicates that tariffs could impact African banks due to a slowdown in China

The credit rating agency Moody’s stated that although U.S. import tariffs will not directly affect banks in sub-Saharan Africa, “second round effects” such as their impact on China and the macroeconomic outlook could still have an impact.

Moody’s noted in a recent research on African banks that the impact is anticipated to include higher finance costs and the aftermath from slower growth in China, a major export market for commodities exporters in Sub-Saharan Africa.

Mik Kabeya, VP-Senior Analyst at Moody’s Ratings, told Reuters on Thursday that “China’s potential economic slowdown is an important second round risk: weaker demand could cut export volumes and prices, especially for commodities.”

Banks book less trade-finance fees when miners and oil companies ship less or take home less money per tonne, which might put pressure on new financing.

In April, China’s official manufacturing activity index dropped to 49.0, the lowest level in 16 months, highlighting the negative impact of U.S. charges.

The International Monetary Fund lowered its 2025 and 2026 growth prediction for China to 4%, cautioning that commodities exporters will be affected by a decline in demand.

Dollar-bond spreads may widen due to investor risk aversion brought on by tariffs, which would lower refinancing costs for banks that fund more than 20% of their assets in wholesale hard currency, according to Kabeya.