Banks that finance trade in Asia are concerned that the tariff war between the US and China will put further pressure on revenues from their letter of credit (L/C) and wider trade finance operations.

Trade finance providers globally have faced declining revenues for five years running, due to a drop in margins in Asian deals, and the trade dispute between the world's two biggest economies will only make things worse.

Susceptible banks

Banks thought to face worsening prospects include HSBC and Standard Chartered as well as other banks with substantial Asian trade finance portfolios.

Earlier this month Washington announced plans to impose tariffs on a further US$200 billion of Chinese products by releasing a list of targeted products.

Declining trade

Global revenue for trade finance banking, which includes import and export L/Cs and supply-chain finance, fell in 2017 to US$26.6 billion, the lowest level in at least eight years, Coalition Development data show.

The financial analysts at Coalition say that trade finance revenues have decreased each year since 2012 when revenues of US$38.3 billion were reported.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.