
Trump's tariffs roil bank stocks, but lenders stay calm

The plunge in bank stocks over the past several weeks developed amid mounting fallout from President Trump's tariff policies, festering inflation worries and the growing specter of a recession.
The KBW Bank Index, while rising on Friday, was still down about 15% from its 2025 peak on Feb. 6. That was just before the president's tariff threats evolved into nascent trade wars with China, Mexico, Canada and the European Union.
The extent of Trump's levies, as well as their duration, have shifted substantially in recent weeks, creating confusion for some business leaders trying to chart courses for capital spending and hiring.
Tariffs, which are typically paid by importers, raise worry that the increased costs of bringing products into the U.S. will get passed onto consumers and reignite inflation that is already stubbornly high. This could tilt the economy into a recession , spur loan defaults and stunt banks' growth.
"The uncertainty surrounding these tariffs and potential retaliations … remains the biggest economic risk moving forward," said Larry Adam, Raymond James' chief investment officer.
Is the market overreacting? Some investors — and bankers — believe Trump is using tariffs as short-term negotiation tactics to elicit trade concessions that will favor the U.S.
For example, Raymond James' forecasting team still expects the U.S. economy to expand this year, at around a 2% pace, though growth could prove choppy.
In addition, several bankers who spoke at the RBC Capital Markets Financial Institutions Conference this month said some of their commercial clients were optimistic about the prospects for Trump's trade strategy. They argued manufacturers could build more of their supply chains domestically, become less reliant on complex global trade and avert costs created by tariffs.
"We've had some clients that are in the materials handling business domestically, and they've expanded product lines," said Brian Willman, head of corporate banking at the $157 billion-asset Regions Financial in Birmingham, Alabama.
Daryl Bible, chief financial officer at Buffalo, New York-based M&T Bank Corp., shared a similar message.
"We surveyed about 500 to 600 of our customers and said, 'What impacts would tariffs have on you?' And 17% came back and said they could potentially have a negative impact with tariffs; didn't say they were having it, but there's a possibility," Bible said of the responses from the $208 billion-asset's bank's commercial customers. "There's also a group out there that actually says they will benefit from tariffs. It's not just one side. It goes both ways."