As US President Donald Trump continues to impose tariffs worldwide, it is a stark reminder of the impact protectionist policies can have on the global payments industry.
Trump has ramped up tariffs as part of his ‘America-first’ agenda, aiming to protect domestic industries and reduce trade deficits. However, his actions have sent shockwaves around the globe, triggering market turbulence and raising concerns across the payments landscape.
While Trump has insisted that this isn’t a quick fix but a long-term strategy, the tariffs have already made a significant impact both globally and within the US.
Since introducing a baseline 10% tariff on several nations, the industry has seen an immediate global response. Klarna, which had planned to launch its IPO in the US last week, ultimately chose to pause its plans due to market volatility.
Dima Kats, CEO and Founder of Clear Junction, tells Payment Expert that “political isolationism and protectionism make the world more fragmented.” He explains that this fragmentation extends to regulations and compliance, which ultimately impacts the payments industry.
Kats highlights cross-border payments as an area particularly vulnerable to these tariffs, describing them as “risky” and requiring a collective effort to circumvent further negative impact.
“Now, with additional regulatory fragmentation, they’re only getting riskier,” he adds.
“Some providers will fail, others will walk away, and a few will invest heavily in new risk management strategies. The unfortunate reality is that customers will likely end up paying higher fees and accessing services in less competitive markets.”
Crypto’s volatility
Sean Dawson, Head of Research at Derive.xyz, states that these tariffs have caused volatility to return to the markets with a “vengeance”, pointing out that crypto markets are experiencing significant price swings.
Since returning to the White House for his second term, Trump has made it a priority to establish the US as the “crypto capital of the world.” This push has included proposals to integrate Bitcoin into the Federal Reserve, the dropping of investigations into crypto companies from the previous administration, and fast-tracking legislation through Congress, despite concerns that it is being rushed.
These moves have won Trump strong support from the crypto community. However, the sector hasn’t been immune to his latest policies, with Bitcoin and Ethereum dropping sharply by 4.5% and 11%, respectively.
Dawson notes that the likelihood of Bitcoin falling below $70K by 30 May has increased by 4%, now standing at 23%, up from 19% just the day before. Similarly, for Ethereum, the chance of it dropping below $1,400 by the same date has nearly doubled, rising from 18% to 33% within the last 24 hours.
He says: “In short, we’re in for a bumpy ride, and volatility is likely to remain high as both traditional and digital markets continue to react to these macroeconomic shocks. Traders and investors should brace for more uncertainty in the weeks to come as the market navigates these turbulent waters.”
A silver lining
While the impact of these tariffs is apparent, what matters now is how the payments industry reacts.
Kats explains that while the industry is responding to short-term volatility, it is ultimately the industry’s responsibility to build solutions within the context of political developments. He adds that each crisis presents an opportunity, noting that “the bigger the crisis, the bigger the opportunity.”
Trump’s tariffs have already had an unintended consequence on trade, with some companies perhaps increasing trade with others that they didn’t pursue in the past and some placing more emphasis on building products themselves.
The same is starting to happen in payments, as Thomas Gillan, CEO of BR-DGE, tells Payment Expert that localisation is “no longer nice to have” but a “strategic imperative”.
He states: “Merchants now more than ever need options that don’t route entirely through US-dominated networks. The rise of domestic schemes and regional orchestration tools is an opportunity, not just a workaround.”
The tariffs may also give a much-needed boost to innovations like the Digital Euro and Open Banking, especially in countries like Canada, which has been criticised for dragging its feet on this front in recent months.
Gillian concludes: “While the Digital Euro remains on the horizon, its development signals a new direction, one in which merchants gain access to a European-built, consumer-safe, programmable payment layer. That’s the future BR-DGE is preparing merchants to navigate.”
While stock markets like the S&P 500 have declined to trading levels as low as levels seen during the pandemic, industry insiders suggest that while the current global economic climate is looking turbulent at best, a focus on finding solutions tailored to industry practices like payments can help the industry move forward as opposed to scaling back.
