Trump’s Tariffs and Fintech

The Unravelling Order

Alex Speedie

April 8, 2025

April 2nd 2025 may well be recorded by historians as the day the Pax Americana, the long-standing security and economic order underwritten by the United States, finally expired. The signs of terminal decline had been visible for some time. Donald Trump’s decision to align with Russia at the United Nations, voting against a resolution designed to bolster Ukraine, was a sharp diplomatic rupture. But it is Washington’s formal designation of the European Union as a trade adversary, and the imposition of sweeping tariffs, that represents a step change: deliberate and arguably irreversible.

For decades, the United States and Europe have shared not only democratic values but deep commercial interdependence. American firms have enjoyed privileged access to European markets, dominating in sectors ranging from high technology to consumer goods. That openness was not accidental. It rested on a transatlantic compact. Europe accepted American economic pre-eminence in exchange for security. The EU’s expansion eastwards, for instance, was carefully choreographed to follow NATO accession. Investment followed defence. Economic growth followed stability.

Now that strategic architecture is crumbling. The security guarantees that once underpinned Europe’s trust in America are no longer assured. The EU has promised a response and the consequences of this rupture are likely to be profound.

Equity markets will swoon
Share prices, the most immediate barometer of expectations, are likely to fall as businesses reprice risk. With the effective tariff rate for importing now around 22 percent, exporters to the USA will face rising costs and falling demand. As goods become more expensive, consumption will suffer. Investors are already bracing for the impact.

Global growth will slow
While some firms may expand domestic operations to compensate, the United States remains a consumption-led economy and a decline in household expenditure will drag on GDP, not just in America, but globally.

The dollar’s dominance will erode
As trade frictions rise, central banks are likely to diversify their reserves away from the greenback. The global south now trades more with China than the United States. The EU is finalising a pact with MERCOSUR. Asia may turn increasingly to the euro or yen. America’s exorbitant privilege, its ability to borrow cheaply thanks to dollar hegemony, may face new challenges, with knock-on effects in bond markets and interest rates.

Europe’s defence industries will flourish
With trust in American military backing ebbing, Europe is looking inward. Germany is already shifting towards a policy of military Keynesianism. France is pushing to ring-fence defence spending within the bloc. Ironically, Trump’s approach may harm American defence contractors most, with European and Asian rivals surging ahead. Share prices have already begun to diverge accordingly.

The combination of rising unemployment, particularly in retail and consumer sectors, and higher prices could bring back the spectre of stagflation and the fintech sector will not be immune. Equally, Crypto may benefit from uncertainty. If markets tumble and inflation rises, digital assets may appear attractive once more. Bitcoin is up 14 percent year-on-year, despite recent volatility. As faith in fiat weakens, crypto could serve as a hedge though it remains volatile and speculative. Nonetheless:

Investment platforms will face attrition. Market downturns tend to expose retail investors’ limits for risk. Falling engagement and assets under management will squeeze margins for investment apps reliant on active users.
Neo-banks will be tested. The best will weather the storm, offering competitive value and efficiency. But should Washington impose tougher licensing conditions on non-American fintech firms (as some in the Trump camp have suggested,) many could be shut out of the world’s largest market overnight.
Payments firms will be squeezed. With fewer transactions and rising operating costs, one of the most saturated corners of fintech could face a painful shakeout.
Peer-to-peer lenders will need smarter risk models. As defaults rise, only platforms with robust AI-driven credit assessments will thrive. Others may falter under the weight of rising non-performing loans.

In summary, since the Bretton Woods system was created in 1944, the Western world has operated under a shared assumption that lowering barriers to trade promotes prosperity. America’s retreat from that ethos is not just a political gambit. It is a rupture in the global economic order. Assuming there is no great reversal in policy by the USA, market dislocations are inevitable.

Fintech, agile and digitally native, may weather the storm better than most. But its focus for now may need to be operating smaller teams, whilst optimising their effectiveness, so to shift from chasing growth to ensuring resilience. And for firms who are hiring, the cost of recruiting the wrong person will become significantly higher. At Rex Machina, we de-risk the hiring process. If you would like to find out how our methods will ensure you recruit the right person, get in touch.

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Trump’s Tariffs and Fintech

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