The Wall Street Journal (WSJ) reports that a protracted trade conflict initiated by the Trump administration could shake American banks’ dominant position in the global financial services market.
Even though the United States traditionally has a large surplus in international trade in financial services (about $130 billion by 2024), tariff wars pose a risk that foreign companies will start looking for alternatives to American banks.
For the past 15 years, American banks have led the global investment banking and advisory services markets.
According to Dealogic, in 2024, US banks took the top five positions in the global ranking of investment banking revenues and were represented in seven of the top 10 positions.
However, tensions in trade relations could change this situation. According to JPMorgan Chase CEO Jamie Dimon, American banks are already “in the crosshairs”: clients may shift to non-U.S. financial institutions, fearing political risks.
“Some customers or countries may change their attitudes toward U.S. banks, and we’ll have to consider that,” said Dimon during his recent quarterly earnings call.
According to the WSJ, US banks are highly dependent on global markets. For example, JPMorgan conducts transactions worth over $10 trillion daily in 160 countries and 120 currencies.
For Bank of America, international loans are a key growth driver: since the end of 2022, overseas corporate lending has grown by almost 14%, with an average loan portfolio growth of 6%. Bank of America CFO Alastair Borthwick emphasizes that the bank has significantly diversified its loan portfolio outside the US over the past 15 years, which has become an important growth driver.
Although Citigroup has not yet recorded an outflow of clients, its chairman, Jane Fraser, admits that the ongoing trade tensions may change foreign companies’ attitudes toward American banks.
Brad Setser, an expert at the Council on Foreign Relations, believes that trade wars can have a “chilling effect” on American banks in global markets: “Foreign firms don’t necessarily want to use American banks for high-cost transactions.”
The WSJ notes that in the long run, the US tariff policy could stimulate financial market reforms in Europe and Asia, leading to the emergence of more powerful regional banking players. Former ECB President Mario Draghi called on the EU to develop its capital markets, reducing dependence on US financial institutions.