Fitch downgrades North American corporate rating outlook to "negative," warning that high tariffs may trigger a dual pressure of inflation and consumption shrinkage
Fitch Ratings has downgraded the 2025 growth outlook for North American non-financial corporations, adjusting the rating outlook from "stable" to "negative." The agency warned that high tariff policies could trigger inflation and a decline in consumption, affecting economic operations. This adjustment involves multiple consumer-oriented industries, where corporate profit models face structural changes, potentially requiring unconventional business strategies to maintain cash flow. Despite maintaining its fundamental assessment of the U.S. economy, Fitch has downgraded its expectations for GDP growth, inflation, and the consumer market
According to the Zhitong Finance APP, Fitch Ratings recently lowered its growth expectations for North American non-financial companies in 2025, adjusting the rating outlook from "neutral" to "negative." The international rating agency warned that if the U.S. government continues to push high tariff policies, it may trigger a new round of inflation and weaken consumer purchasing power, posing dual pressures on economic operations.
This rating adjustment covers several consumer-oriented industries in the U.S., including retail, alcoholic beverages, food services, as well as global automotive manufacturing and oil and gas extraction sectors. Fitch's analysis pointed out that, in stark contrast to the inflation cycle of 2022 to 2023, companies are currently struggling to maintain operational data through pricing strategies—despite rising prices at that time, a strong job market and the fiscal stimulus policies during the COVID-19 pandemic provided effective support for the consumer market.
"We observe that corporate profit models are facing structural changes," Fitch emphasized in a research report released on Wednesday. The agency predicts that if consumers cannot absorb the price increases of end products caused by tariff policies, companies will be forced to adopt unconventional operational strategies, including but not limited to reducing operating costs and delaying capital expenditures to maintain cash flow.
It is noteworthy that while Fitch maintains its fundamental judgment that "there will be no technical recession in the U.S. in 2025-2026," it clearly pointed out that "regulatory policy uncertainty is eroding economic growth momentum," simultaneously lowering its expectations for U.S. GDP growth, inflation trends, and consumer market performance.
In terms of industry rating differentiation, Fitch maintains a "neutral" outlook for the software technology services and business services sectors, believing that the demand for digital transformation will provide stable support for related companies. The aerospace and defense industry, on the other hand, received an upgraded rating, primarily driven by the growth in aircraft orders as the global civil aviation market gradually recovers, as well as the continued increase in defense budget investments by major economies
