US regional banks face results test as tariffs trigger uncertainty, growth worries

Heightened uncertainty fueled by the on-and-off U.S. tariffs will likely take center stage as the nation’s regional banks gear up to report first-quarter results next week, with investors tracking signs of stress in asset quality.

President Donald Trump’s decision to pause many of his new reciprocal tariffs for 90 days provided a reprieve to regional bank stocks on Wednesday, but analysts warned that the broader conflict remains unresolved.

The turmoil sparked by the flip-flop starkly contrasts with the optimism at the start of the year when the banking industry rallied on hopes of strong loan growth and a rebound in deal activity under the new business-friendly administration.

“While near-term overhang from tariffs may have eased for now, regional banks likely face a challenging year,” analysts at J.P. Morgan said, observing that loan demand may remain subdued as borrowers keep to the sidelines seeking clarity.

Investors should also pay close attention to the escalating tensions with China, they said. While most of the steep tariffs were temporarily eased, the U.S. raised duties on imports from China to 125% from 104%, with Trump accusing Beijing of showing a “lack of respect” for the world’s markets.

Source: Reuters