Wall Street’s global power in jeopardy as Trump’s trade war intensifies

The financial crown America built over decades is now slipping. Wall Street’s dominance in global banking is under direct threat as Trump’s trade war expands. 

For years, the US has run a massive trade surplus in financial services while importing more goods than it sells. But that edge is cracking.

The US Bureau of Economic Analysis reported a $130 billion financial services surplus in 2024. That came from things like trading commissions, mergers-and-acquisitions advising, and underwriting deals. Around $10 billion of that came from just those high-fee services.

As of last year, American banks held the top five spots and seven out of the top ten in investment banking, based on data from Dealogic. Now, that dominance is fading. Clients are pausing transactions, stalling major deals, and freezing capital moves while waiting to see how far Trump will go.

Global clients slow down while banks cling to cross-border business

Executives are admitting they’re on shaky ground. Jamie Dimon, CEO of JPMorgan Chase, said during the company’s earnings call, “We will be in the crosshairs. That’s what’s going to happen.” 

Jamie added, “We’re deeply embedded in these other countries, people like us. But I do think some clients or some countries will feel differently about American banks, and we’ll just have to deal with that.”

These banks rely on international business for growth. JPMorgan pushes more than $10 trillion daily through 160+ countries in over 120 currencies. Bank of America has seen a nearly 14% jump in loans to non-US companies since 2022, while their total loan growth was only 6% in that same period. That foreign loan book is keeping their numbers alive.

Alastair Borthwick, Bank of America’s CFO, explained on their call that lending abroad has driven their growth for over a decade. “As we’ve become a more global and international company than maybe we were in 2007, it was important for us to diversify the loan book outside of just the US,” Alastair said.

But all of that depends on international trust. If trade tensions keep escalating, clients will walk. American banks might not get replaced overnight, but every stalled deal chips away at their influence. And they know it. The capital markets they bring to the table have long been a major draw for foreign companies. But with Trump’s war changing global alignment, that advantage might fade.

Citigroup is trying to hold on. CEO Jane Fraser told analysts that clients haven’t pulled away—yet. She said the bank might even get more attention as companies rethink how they move money across borders. She described Citigroup as “a port in the storm,” noting they’ve been in 94 countries for decades. “We were the first bank in, sometimes we’re the only international bank in” a country, Jane said.

Foreign governments and banks rethink dependence on US institutions

If this war drags out, foreign governments could start building alternatives. Mario Draghi, ex-head of the European Central Bank, has been calling on the EU to improve its capital markets. If that happens, companies might stop relying on US banks entirely.

And if they don’t need to tap US markets, they don’t need Citigroup, JPMorgan, or Goldman Sachs either. Meanwhile, a US recession could slam the brakes internally. Wells Fargo, which just booked $4.9 billion in profit, says they’re ready.

CEO Charlie Scharf said they’re sitting on $163 billion in equity and $15 billion in reserves. The eight largest US banks now have about $1 trillion in equity capital to absorb future hits.

Bank of America compared today to the 2008 crisis and Covid. Their loan portfolio is bigger now but has less exposure to consumer credit and home equity. Their commercial loans are more balanced. Still, nobody knows how deep a new downturn could go. Jane Fraser said, “Let’s not fight the last war. The issue we’re tackling at the moment is something different.”

Brian Moynihan, Bank of America’s CEO, said a light recession wouldn’t shake them much. “We should fare well on that,” Brian said. Households aren’t drowning in debt, and the average loan-to-value on their mortgages is below 50%. But all of that means nothing if Trump keeps ripping up the global financial playbook.

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