HSBC offers Trump tariff loan to cover clients' import costs

Bloomberg

HSBC Holdings is offering a new loan product to U.S. companies struggling to cover the cost of President Donald Trump's tariffs that have roiled international supply chains.

The London-headquartered bank said on Wednesday its TradePay platform was being extended to directly cover the cost of tariff payments, allowing importers to effectively borrow to meet the increased expenses involved in shipping products into the U.S.

"By settling import duties directly and frictionlessly through HSBC TradePay, our U.S. clients have more visibility and control over their working capital," said Vivek Ramachandran, head of global trade solutions at HSBC.

Under the new loans, customers' import payments will be automatically paid through pre-agreed credit with brokers or a direct deduction using automated clearing house credits, meaning companies will be better able to manage their cash flow and settle duties more efficiently.

HSBC is the world's largest trade bank and the biggest international bank in China, giving it a crucial role in oiling the wheels of international trade, particularly between the two biggest economies. The U.S. has imposed tariffs as high as 145% on Chinese goods, while China has hit back with retaliatory rates of 125%. Talks aimed at de-escalating the situation are due to take place this week.

Speaking last week, HSBC Chairman Mark Tucker said world trade was facing a "period of deep and profound change."

"The over-arching impact of the changing approach to global trade relations has been to increase economic uncertainty with serious potential risks to global growth," Tucker said.

The banking industry has been concerned about the impact the tariffs would have on their customers and on the U.S. economy. Trump's tariffs, especially those announced on April 2, didn't impact banks' first-quarter results, but they could have ramifications for the rest of the year.

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S&P Global Market Intelligence warned in a recent report of potential consequences, including slower growth, higher delinquencies, reduced investment activity and "modest" earnings pressure. The barrage of tariffs "will serve as an overhang on the economy," according to the report. As a result, U.S. bank earnings could decline 2% year over year, S&P predicted.

If financial conditions tighten, some banks may need to worry about lines of business that could be constricted, such as trade finance, as well as certain trading functions, according to Clay Lowery, executive vice president of research and policy at the Institute of International Finance.

To be sure, U.S. banks on the whole remained very well capitalized through the first quarter, and therefore should be able to withstand any financial shocks that may come later this year. Several bank CEOs expressed optimism during their first-quarter earnings calls about the need for their services even amid macroeconomic uncertainty, while at the same time saying it's a wait-and-see situation.

Treasury Secretary Scott Bessent on Tuesday told lawmakers in the House Appropriations Committee that the U.S. is renegotiating trade deals with 17 of its 18 largest partners — with the notable exception of China — and expects most to be finalized by year's end.

—Allissa Kline, Catherine Leffert and Kyle Campbell contributed to this article.