The intensifying global trade tensions—including the escalation in trade conflict between the U.S. and China—are weighing on credit conditions in North America amid slowing economic activity and heightened investor risk-aversion. Sharply higher tariffs are a top concern for corporate borrowers, threatening to hurt profits for those exposed to imports and international markets. We estimate the chance of a U.S. recession at 35%, as price pressures and tariff uncertainty erode business and consumer sentiment and outlays. A sharper-than-expected economic downturn in the region could cause more severe credit stress.