2025 Tariff War: How Financial Services, Fintech, RegTech & Professional Services Are Bracing for Impact

A dramatic escalation in tariff hostilities between the United States and China, set against broader global trade tensions, has triggered significant economic uncertainty in April 2025.

While the new US tariffs are primarily aimed at goods, they are poised to reshape growth prospects for service sectors—an issue this article explores specifically in the context of financial services, fintech, regtech, and professional services—through market volatility, regulatory shifts, and changing consumer behaviours.

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Recent Tariff Developments (April 2025)

The tariff landscape has shifted at breakneck speed in recent weeks, creating turmoil across the global economy.

On 5 April, Donald Trump shocked global markets by announcing a 10% tariff on all imports, effective immediately, with further country-specific measures beginning on 9 April [1]. This surprise move triggered the steepest two-day drop in the history of the United States stock market, wiping out an extraordinary $6.6 trillion in value before the weekend [1].

Tensions intensified when Washington rolled out tariffs aimed squarely at China.

By 9 April, US levies on Chinese goods had soared to 125%, up from an already punishing 104% [2]. These increases came in response to China’s third wave of retaliatory action, which involved raising tariffs on all US goods by 34% from 10 April [3]. By mid-April, China’s tariffs on American products had risen to 84% [2].

In a surprising twist on 9 April, President Trump announced a three-month suspension of all newly implemented ‘reciprocal’ tariffs, with the notable exception of those targeting China [4].

This reversal came from a president who had insisted that high tariffs would remain a long-term cornerstone of his trade policy. Nevertheless, the baseline 10% tariff on all imports into the United States continues to stand [4].

Beijing has responded in kind, widening its countermeasures beyond tariffs. Actions include:

New export restrictions on rare earth materials crucial for manufacturing electronics and defence equipment
Adding US defence and tech firms to the Export Control List and Unreliable Entity List
Launching antidumping investigations
Suspending imports of certain US agricultural products from specific US exporters [3]

Economic and Market Responses

Financial markets have swung wildly in response to these developments.

The S&P 500 index suffered its largest four-day decline on record, briefly dipping into bear-market territory (a 20% drop from its most recent peak) on 8 April before clawing back some losses [1][5].

Yet, markets rallied following news that Trump would pause some reciprocal tariffs (excluding China). Wall Street viewed this as a partial de-escalation, prompting a significant uptick in share prices [4].

Despite this short-lived optimism, forecasts for the broader economy are grim. The Wells Fargo Investment Institute cut its US GDP growth target for 2025 from 2.5% to just 1%, reflecting apprehensions about the severity of recent tariffs [5].

Similarly, JP Morgan Private Bank warns that if these tariffs persist, they could shave 1.5–2.0 percentage points off US GDP growth, raising the odds of an economic recession [6]. The World Trade Organisation has also lowered its growth outlook for global trade in goods by nearly four percentage points, projecting a 1% contraction in world trade volumes [7].

Historical Parallels from the 2018–2019 US–China Trade War

There are striking echoes of the 2018–2019 US–China trade war, though the stakes are higher this time around.

The earlier conflict began in January 2018 as the Trump administration introduced tariffs and other barriers to pressure Beijing on intellectual property rights and alleged unfair trade practices [2]. Although a phase-one deal was signed in January 2020, that trade war was widely deemed a failure for the United States by the close of Trump’s first term [2].

In comparison, today’s tariffs are far larger in scope and magnitude, with rates reaching as high as 125% on Chinese imports, rather than the more selective 25% tariffs seen before [2]. Moreover, while the 2018–2019 conflict was predominantly focused on China, the current situation involves multiple countries, placing the global trade system under unprecedented strain.

Sector-Specific Implications

Financial Services

Financial services companies are not direct tariff targets, but they are exposed to multiple knock-on effects. Volatility in equities has made actively managed investment strategies more difficult to steward, potentially forcing portfolio managers to rebalance positions more frequently in an effort to maintain strategic allocations [8].

Credit markets also feel the heat. The impact on key manufacturing sectors could prompt ratings agencies to downgrade both government and corporate bonds, ultimately widening credit spreads [8]. In extreme cases, the risk of corporate defaults may rise. Meanwhile, derivatives traders must prepare for increased margin calls and recalibrated pricing, given banks’ shifting market expectations [8].

A recession triggered by trade tensions would pose additional challenges, prompting banks to impose tighter lending standards at a time when many businesses may need extra liquidity due to direct or indirect tariff impacts.

Fintech

Fintech companies have been among the first to feel the fallout.

Since the onset of Trump’s global trade conflict on 2 April, shares in Affirm have tumbled over 21%, Robinhood by 17%, and SoFi by nearly 20% [9]. Many fintechs derive income from consumer loan repayments and transactional fees; both revenue streams could be undermined by reduced consumer spending and heightened market insecurity [9].

In contrast to traditional banks—whose client bases can be more diverse—fintech firms often cater to younger or more economically vulnerable consumers, leaving them open to greater credit and market risk [9]. Currency volatility and new regulatory barriers also threaten cross-border payments. Moreover, raising capital is likely to become more challenging as lenders grow cautious.

RegTech

For regulatory technology providers, this environment is a double-edged sword.

On one hand, heightened complexity in trade policy points to increased demand for regtech solutions, particularly those offering real-time compliance monitoring, AI-driven risk assessments, and automated processes such as KYC checks [10][11]. On the other hand, regulatory fragmentation across different jurisdictions, driven by diverging trade stances, could hamper efforts to scale solutions internationally.

Professional Services

Professional services, including consulting and legal advisory, stand to benefit from heightened demand for guidance on trade policy, regulatory compliance, and scenario planning.

Boardrooms are seeking expert advice on how to manage supply chains, capital spending, and strategic planning in the face of tariffs and counter-tariffs [12].

At the same time, deteriorating economic conditions could tighten client budgets. Firms operating internationally must stay attuned to shifting political currents, ensuring advice is rooted in both legislative realities and corporate objectives.

Expert Insights and Forward-Looking Projections

Industry observers caution that the broad reach and high rates of the newest US tariffs could slow both American and global growth so severely that East Asia might see its overall export opportunities reduced, rather than merely redirected. Many worry about a spiralling cycle of retaliatory measures and further trade deterioration, especially if the White House fails to negotiate any form of trade agreement in the months ahead.

Yet some analysts remain moderately optimistic about specific pockets of the market. There is a prevailing view that, despite unfolding tariff policies, high-grade credit remains fairly insulated. However, a prudent, highly selective investment strategy is advised to avoid exposure to sectors most at risk and to tap emerging opportunities in volatile markets.

Strategic Considerations for Firms looking to maintain growth with tariff uncertainty

Diversification of Supply Chains and Markets: Organisations should assess their dependency on tariff-affected regions, considering both supply-side and customer diversification to mitigate risk.
Robust Scenario Planning: Scenario modelling is essential, enabling businesses to adapt swiftly to abrupt changes in tariff regimes or retaliatory actions [12].
Strategic Investment in Compliance Technology: Regtech tools can enhance efficiency and precision in managing mounting regulatory demands [10][11].
Cash Conservation and Financial Resilience: Guarding balance sheets against potential economic headwinds is increasingly prudent, given the unpredictability of trade policies.
Continuous Monitoring and Agility: As tariffs and countermeasures evolve, real-time market and political intelligence will be a vital asset for responsive decision-making.

For firms looking to maintain growth while developing and launching new service lines or expanding into international markets, these considerations become even more critical.

In a volatile environment shaped by shifting trade policies and rapidly evolving consumer demands, organisations must integrate scenario planning, robust compliance frameworks, and flexible resource allocation into their international expansion strategies. By proactively managing risk and adapting operations to local market conditions, companies can seize opportunities that arise even amid heightened uncertainty.

Conclusion

The global trade tensions of April 2025 present a powerful new threat to economic stability and growth. Although financial services, fintech, regtech, and professional services are not direct targets of the mounting tariffs, they remain vulnerable to seismic aftershocks, ranging from market turmoil to strained consumer spending and increasing regulatory pressures.

A temporary reprieve on some reciprocal tariffs has offered a ray of hope for a diplomatic breakthrough, yet the US–China relationship remains deeply entrenched in tariff escalations. With so much still in flux, firms should adopt a forward-looking strategy that champions agility, robust scenario planning, and focused investment in compliance and risk management. Those that successfully navigate this uncertain terrain will likely find themselves better positioned for both resilience and growth when trade tensions finally ease.

Growth strategy with Lagom Consulting

As the global trade landscape continues to evolve, proactively protecting and expanding your business has never been more crucial.

Lagom’s dedicated team is here to guide you every step of the way—from developing robust compliance frameworks and scenario planning to optimising cross-border operations and launching new service lines with confidence. Partner with Lagom today and transform uncertainty into opportunity.

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