High-bargaining-power (low-bargaining-power) customer (supplier) firms borrow (lend) more trade credit according to the literature. We study whether this bargaining power effect strengthens or weakens when the credit supply tightens. We construct a Nash bargaining model of trade credit and show that the bargaining power effect weakens if their financing costs increase more than that of the customers. We find support for our theory using a unique database of listed firms in China that discloses firms’ transaction information with important customers and suppliers. Interest-rate sensitive suppliers, proxied by a non-state ownership, a high debt rollover risk, and a high financial constraint index, reduce trade credit to their high-bargaining-power customers during credit contractions.