Fitch Says US-Taiwan Trade Deal Eases Risks, Supports SME Loan Quality

Taiwan’s small and medium-sized enterprises are a key source of employment and domestic demand, making their repayment capacity an important gauge of bank asset quality. Fitch Ratings said low unemployment and resilient consumption continue to support SME cash flow, helping keep non-performing loan ratios at low levels and providing a stable foundation for lenders’ credit portfolios.

Fitch said the US-Taiwan trade agreement finalized in 2026 has reduced uncertainty surrounding trade policy and Taiwan’s macroeconomic outlook. That should support SME borrowers’ debt-servicing ability and keep related bank loan quality stable. The rating agency nevertheless flagged a sharp housing-market correction as a downside risk, as falling property values could weaken collateral coverage, business confidence and borrowers’ financial resilience.