Fintech firms face market pressure due to new tariff measures

Investors reacted negatively to a new 10% baseline tariff applied to goods from all economies, with fears mounting over the potential for higher consumer prices, weakened demand, and a possible global economic downturn. 

According to Reuters, since the tariff announcement on 2 April 2025, Affirm’s shares have dropped over 21%, Robinhood has seen a decline of more than 17%, and SoFi’s stock is down nearly 20%.

Tariffs raise concerns about consumer credit and spending 

The trade measures have renewed concerns about consumer finances, particularly among companies that rely on discretionary spending and creditworthiness. Affirm and SoFi, which both offer credit products, could potentially face increased risks if consumer sentiment continues to decline and inflationary pressures reduce disposable income. Representatives from both firms have acknowledged that delinquencies have risen slightly, though they attributed the trend to specific pricing decisions rather than general economic shifts. 

In the quarter ending 31 December, Affirm reported that 2.5% of its monthly loans were over 30 days delinquent, while SoFi disclosed that 0.55% of its personal loans were delinquent for more than 90 days. In comparison, Federal Reserve data showed that 2.75% of consumer loans across US banks were over 30 days delinquent during the same period. 

Some analysts argue that fintechs are particularly exposed during periods of economic contraction. Unlike traditional banks, which typically serve a more diversified customer base, fintech platforms often target mass-market or lower-income consumers, which are groups more likely to reduce spending in response to economic shocks. 

One industry researcher noted that a downturn often affects consumer-focused technology firms early on, as discretionary purchases are among the first to be postponed when household budgets tighten. 

US consumer sentiment, already weakened before the new tariffs, fell to a 2.5-year low in March, according to data from the University of Michigan. The administration has defended the tariffs as a temporary adjustment intended to benefit the domestic economy in the long run, though analysts have expressed concern that consumers will experience them as a persistent rise in costs.