US President Donald Trump’s sweeping tariff policies, especially the new 10% tariff on all imports, have sent shockwaves through the fintech sector. Stocks of major fintech companies including Robinhood, Affirm, and SoFi have slumped amid growing concerns about rising prices and a potential recession.

Since Trump launched his global trade war on April 02, shares in Affirm have fallen by 13%, while Robinhood and SoFi have declined 4% and 12%, respectively.

These companies rely heavily on consumer spending and are particularly vulnerable to shifts in consumer behavior. Affirm and Robinhood, for instance, earn a significant portion of their revenue from fees from debit card and credit card purchases, income that is highly sensitive to fluctuations in consumer spending. SoFi, which generate most of its revenue from its lending business, is similarly exposed to any downturn in consumer spending.

Some analysts believe that Affirm, which specializes in buy now, pay later (BNPL) arrangements, could be among the hardest hit if consumers pull back spending. Goldman Sachs estimates that the San Francisco-based company could see its revenue less transaction costs margins drop more than 22%.

Credit card issuers, which are also closely tied to consumer spending and credit, have also taken a hit. American Express has fallen 8%, Capital One has tumbled 11%, and Discover has slid more than 9%.

“A recession typically hits nice-to-have mass-market consumer businesses, including fintechs, harder than other sectors because the first group to pull back spending in a recession is lower-income consumers,”James Ulan, director of research, emerging technology at PitchBook, told Reuters on April 08.

B2B cross-border payments among hardest hit

Beyond consumer finance, Michael Greenwood, a senior research analyst at Juniper Research, warns that the business-to-business (B2B) cross-border payments market is also bracing for impact. The sector is expected to be among the hardest hit.

“These transactions are already more complex and costly than domestic payments, and the new tariffs will only add friction,” Greenwood wrote in a post earlier this month.

For providers, this could translate in a drop in payment volumes to and from the US, with trade routes shifting as businesses look for more cost-effective options. Heavily impacted countries like Vietnam may see a sharp decline in transaction flow, while others with similar advantages but fewer trade barriers could benefit.

Still, even with new corridors gaining traction, the overall volume of transfers is expected to fall. This downturn could squeeze smaller, less resilient players in the space and dampen momentum for innovation, potentially stalling efforts to streamline international transactions.

A tougher funding environment

The challenging economic environment is also tightening the funding landscape. Amias Gerety, a partner at QED Investors and a former US Treasury official, told Pymnts in a recent interview that late-stage fintech companies are finding themselves in a particularly difficult situation, grappling directly with the consequences of market volatility and the collapsing prospects for initial public offerings (IPOs).

High-profile fintech startups such as Klarna and Chime, two sizable enterprises with revenues in the billions, now face limited opportunities to secure additional funding and are forced to delay public offerings due to extreme market uncertainty and vanishing investor appetite.

In terms of capital raising, the current climate demands adaptability. Gerety said that while exceptional companies can still attract capital from patient, long-term investors, the broader market will significantly thin, a sentiment which Pitchbook’s senior analyst, e-commerce and retail, Eric Bellomo, shares.

Gerety concluded that while the US economy is strong enough to weather storms, the unnecessary volatility introduced by the tariffs will deeply damage investor confidence, disrupt markets, and potentially trigger a recession. The damage will leave lasting scars on the economy.

European and Swiss responses

In the European Union (EU), these trade tensions have led the European Commission to consider countermeasures like a digital services tax (DST). The tax could potentially target US tech and payment giants such as Google, Amazon, Meta, PayPal, and Apple Pay.

The EU has been seeking to reduce dependence on US platforms and promote payment sovereignty through initiatives like the digital euro.

Meanwhile, Switzerland has delayed regulation of large online platforms such as Google, Facebook, YouTube and X. Several well-informed sources told the Keystone-SDA news agency earlier this week that smoldering tariffs dispute with the US was the latest reason for the delay.

The Swiss Federal Council has been looking to regulate tech giants since at least 2023, striving to strengthen user rights and increase oversight. However, the move has been postponed several times.

President Trump’s tariff announcements on April 02, 2025, triggered massive disruption across global market. Following the news, the S&P 500 Index fell over 274 points or 4.88% on April 03, the second largest daily point loss ever, while the Nasdaq Composite plunged over 1,050 points or 5.97%, the largest point loss in its history.

Across April 03 and 04, US stocks lost US$6.6 trillion in value, the Wall Street Journal reported, their biggest two-day loss in history by a margin of US$2.2 trillion.

Featured image credit: edited from freepik