Trade war puts auto credit ratings on shaky ground

The global trade war initiated by US President Donald Trump poses a serious threat to automaker and supplier credit ratings. Trump’s executive order of 26 March 2025, ‘Adjusting imports of automobile and automobile parts into the US’, introduces a 25% tariff on vehicles and components imported into the US in the name of national security. While the legal justification of this exercise of power remains under debate, companies and governments around the world are scrambling to mitigate the impact.

Among other things, this new trade environment is expected to weaken global credit conditions, bringing an end to what has been a generally favourable environment for borrowers. A good credit score demonstrates financial strength and stability, secures more attractive financing, and sends a positive message to suppliers and customers. During the COVID-19 pandemic, numerous automotive players saw their credit ratings downgraded, and a similar level of disruption could play out in the wake of the tariff war.