Corporate bankruptcies may reach 8% within the next year, as Trump government duties increase the likelihood of recession, according to Moody’s rating.

Bankruptcies and bankruptcies are increasing in periods of economic decline, while new tariff measures are exceeding the forecasts of many experts. However, even if they reach 8%, bankruptcies will remain below the historic high of 9.7% in 2000, when the Dotcom bubble collapsed.

“The duties announced by the White House on Wednesday are stepping up the credit risk for businesses, increasing the chance of bankruptcies and larger spreads, trends that are already starting to appear,” said David Hamilton, general manager and head of Moody’s Asset Management.
“The index of uncertainty has just climbed to 11.”

At the same time, the evaluation firm has announced that European countries that will be more affected by the increase in US duties will be Ireland, Slovakia, Germany, Hungary, Italy and Austria.

This assessment is based on the percentage that exports to the US represent for each country’s economy.

“The impact of the new duties” announced by US President Donald Trump “vary significantly in line with the areas,” Moody’s warns. In the European Union, the sectors of machinery and alcoholic beverages “will be more affected because more than one fifth of the exports of these products is intended for the United States,” the house explains in a note.

“The European Union’s response will determine the overall impact on economies,” Moody’s explains, depending on whether it will impose other duties or not.

The EU will try to negotiate with Washington the reduction of the announced duties. But it is likely to respond by imposing duties on US imports.