How banks have adjusted their lending in response to trade tensions

15 July 2026

By Anastasia Allayioti, Alessandro Ferrari, Petra Köhler-Ulbrich, Matías Lamas Rodríguez and Wouter Wakker

Changes in global trade policies and heightened trade tensions pose a challenge for euro area firms, particularly those operating internationally. For banks, these developments increase credit risk: the firms affected can face volatile demand, supply disruptions and squeezed margins, and may find it harder to service their debts.

This post looks at how euro area banks have responded to rising trade tensions since 2025, drawing on granular analyses of loan portfolios from AnaCredit and survey data from the euro area bank lending survey (BLS). It focuses on trade with the United States, which has been at the centre of recent policy shifts, including the broad-based tariffs imposed in 2025.^[1]

Our findings show that banks have responded to these risks by stepping up their monitoring of exposed borrowers. They have also adopted a more cautious stance when lending to firms. These adjustments were more pronounced among the banks most heavily exposed to trade risks, particularly where such risks compounded existing corporate vulnerabilities. For firms, higher trade risks have not only led to tighter lending conditions, they have also dampened loan demand.

Uneven trade risk across euro area banks’ loan portfolios

Euro area banks’ exposure to trade risk depends on both the importance of trade for their corporate borrowers and the share of affected firms or sectors in their loan portfolios. We measure this exposure in two steps. First, we calculate the share of euro area value added consumed in the United States and the share of US value added embedded in euro area firms’ output. Second, we average these shares at bank level, weighting them by each individual bank’s exposure to specific countries and sectors.^[2] This allows us to capture the exposure of euro area banks to trade with the United States through their loan portfolios, based on how reliant their corporate borrowers are on exports to and imports from the United States. Chart 1 shows how these exposures are distributed across banks.

Chart 1

Distribution of euro area banks’ exposures to trade with the United States

(y-axis: kernel density across banks, x-axis: trade exposure at bank level, percentage)

Three key insights emerge:^[3]

First, euro area banks are more exposed to US export-related risks than to import-related risks. In Chart 1, the blue area (showing goods and services exported to the United States) is positioned further to the right, indicating higher overall exposure. Meanwhile, the yellow area (representing goods and services imported from the United States) is concentrated further to the left, reflecting lower exposure.

Second, export-related risks from trade with the United States vary from bank to bank, as indicated by the wide blue distribution, with many banks only moderately exposed. By contrast, import-related risks are concentrated in the low-exposure range, suggesting that most banks face limited risks from imports from the United States.

Third, a small number of banks are highly exposed to trade risks stemming from euro area exports to the United States, as shown by the long right tail of the blue distribution.

So how are these exposures affecting lending by euro area banks? In 2025, about half of the banks participating in the euro area BLS reported that trade risks were important, and expected similar levels of exposure in 2026.^[4] High tariffs on EU exports to the United States and ongoing trade uncertainty may therefore influence banks’ credit conditions, as explored in the following section.

Trade tensions and tighter credit supply

Rising trade tensions are likely to have led to stricter lending conditions for firms, particularly those reliant on exports to the United States. To quantify this effect, we analyse the relationship between bank lending and banks’ exposure to trade risks in export markets. Since changes in lending can also reflect weaker loan demand, driven by a decline in investment owing to tariffs and uncertainty, we have used granular AnaCredit data to isolate the effect on bank loan supply.^[5]

Chart 2 suggests that the banks most exposed to borrowers exporting to the United States have reduced their loan supply the most since April 2025. This decline coincided with heightened trade tensions, particularly the threat of tariffs. The dampening impact on loan supply is estimated to be have been most pronounced between April and October 2025, when US-EU trade disputes were at their peak. It then moderated later that year as trade sentiment improved following the preliminary US-EU trade framework agreement negotiated over the summer and as policy uncertainty eased.^[6]

These findings highlight how a volatile trade environment and higher tariffs can influence banks’ risk assessment, leading to tighter credit supply.^[7]

Chart 2

Relationship between bank loan supply and exposure to US-exporting borrowers

(impact of a one standard deviation increase in export exposure to the United States on supply-driven three-month loan growth (standard deviation, %))

Data from the BLS bear this out.^[8] Since mid-2025, several banks have reported changes in lending behaviour due to trade risks. While some banks opted to monitor the situation closely without altering credit standards, others tightened them, particularly for firms in sectors highly exposed to trade risks. In some cases (e.g. in the car industry) trade-related tightening compounded pre-existing structural vulnerabilities.

A net 11% of banks reported stricter credit standards in 2025 owing to changes in global trade policies and the associated uncertainty, with similar effects expected in 2026 (Chart 3). These decisions were driven by lower risk tolerance and concerns over credit quality, reflecting heightened prudence despite banks’ solid balance sheets overall. Meanwhile, trade tensions also dampened firms’ loan demand: a net -6% of banks reported a decrease in 2025, while a net -3% expected this decline to continue in 2026.^[9]

Chart 3

Impact of changes in trade policies and related uncertainty on credit standards and firms’ demand for loans

(net percentages of banks reporting a tightening/easing impact on credit standards (+/-), a deterioration/improvement in banks’ situation (+/-) and a positive/negative impact on loan demand (+/-))

Conclusions

Overall, economic policy uncertainty has weakened credit dynamics.^[10] Recent trade tensions have exacerbated this impact, not only by reducing loan demand but also by prompting the banks most exposed to firms exporting to the United States to further tighten their lending conditions. While euro area banks continue to maintain robust balance sheets, they have been forced to adjust their strategic planning regularly and adopt more cautious lending practices in order to navigate these trade-related risks.

The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.

Check out The ECB Blog and subscribe for future posts.

For topics relating to banking supervision, why not have a look at The Supervision Blog?