Uncertainty Overload: Tariffs Cast Shadow on FinTech Funding and Growth

So far, there have been 10 Mondays in the Trump administration, each possessing its own variety of manic behavior. “Manic Mondays,” we’ve been calling them. For example, there was the Monday when the CFPB looked like it was going to be deleted. Then there was the Monday where it wasn’t. Then there was the Monday following the nomination hearing for the CFPB director-designate Jonathan McKernan. He’s still the designate. No vote on his nomination has been scheduled.

But as PYMNTS CEO Karen Webster pointed out at the beginning of this week’s Washington Weekly conversation with QED Investor Amias Gerety, this Monday (April 7) just might be the most manic yet. A menu of stiff tariffs was introduced on Wednesday, April 2, and the stock market, along with most economist guidance for the balance of the year, went south almost immediately. In fact, on this most manic of Mondays, Gerety might have uttered a candidate for the greatest understatement of the year when he told Webster: “Not since the financial crisis have people needed to pay this close attention to the news. And I must tell you, figuring out tariffs is not a good extracurricular activity for CEOs.”

But it is the reality. As of this writing, the Dow was off 700 points, and the watercooler talk had turned to a 90-day tariff postponement, which the White House later said was “fake news.” For FinTech companies, especially those considering public offerings, the impact has been especially pronounced. Gerety, a former assistant treasury secretary in the Obama administration, noted that many FinTech firms poised to enter the IPO market have abruptly reversed course or put plans on indefinite hold. This shift marks a significant disruption for these companies, which view IPOs not just as milestones but as crucial events for raising capital and fueling aggressive expansion.

“IPOs are not the destination,” Gerety said, “but they are a massive capital formation moment. It empowers companies that go public, allowing them to be more aggressive, to acquire companies, hire more, and lower their cost of capital. All these benefits are going away.”

FinTech Growing Pains

Gerety emphasized a clear divergence in advice given to FinTechs based on their stage of growth. Early-stage companies, he noted, should stay narrowly focused on customer acquisition and product development, largely insulated from macroeconomic uncertainty. “The early stage, the classic advice is you’re so small, the only way you win is by winning,” Gerety said. “Get the next customer, make the next great product, delight the next consumer. That’s the only thing you can do. It’s the only thing you should do.”

Late-stage FinTech companies, however, find themselves in a starkly different situation, grappling directly with the consequences of market upheaval and the collapsing prospects for IPOs. In terms of capital raising, the current climate demands adaptability. Gerety suggested that while exceptional companies can still attract capital from patient, long-term investors, the broader market has significantly thinned. High-profile FinTechs such as Klarna and Chime, both sizable enterprises with revenues in the billions, now face limited opportunities to secure additional funding.

“These are big, real companies,” Gerety said, “but can they be aggressive right now? No. Everyone’s sitting on their hands and saying, ‘Let’s wait and see.’”

The Uncertainty Factor

Uncertainty, according to Gerety, remains the critical element undermining financial services. By their nature, financial institutions rely heavily on stability to provide loans, extend credit and make long-term investments. Current conditions make it difficult for businesses to make long-term commitments, whether building factories, expanding supply chains, or launching major projects. “Financial services need certainty,” Gerety said. “If you’re planning for 10 or 14 years, uncertainty is devastating.”

As companies approach earnings season, investors and executives brace for troubling guidance. Gerety expected sharp downward revisions in forecasts and increased volatility. Although first-quarter results may appear stable due to prior benign conditions, they now bear little predictive power given the swiftly altered economic landscape. Major financial institutions, including JPMorgan, have already adjusted their forecasts toward predicting recessionary conditions.

“Q1 was still a benign environment,” Gerety said, adding, “but the environment has changed dramatically, and even guidance will reflect that heightened uncertainty.”

Despite the turmoil, Gerety finds one potential silver lining. As he and Webster mused, this crisis is self-inflicted. And by nature, it could, theoretically, be reversed swiftly. However, the damage in terms of global trust and long-term economic positioning could take longer to recover. Even if tariffs were reversed immediately, Gerety cautioned, the U.S. has already signaled unpredictability, prompting global partners to reconsider alliances and investment strategies.

“Even if tariffs were to evaporate tomorrow,” he noted, “it would still change economic arrangements worldwide. Europeans, South Asians and Latin Americans are already reconsidering their investments, pushing closer to competitors like China.”

Gerety concluded that while the U.S. economy is strong enough to weather storms, the unnecessary volatility introduced by tariffs has deeply damaged investor confidence, disrupted markets, and potentially triggered a recession. The damage will leave lasting scars on the economy. “We have real competition in industries like electric vehicles, and we should be uniting with global democracies and allies,” Gerety said. “Instead, we’ve disrupted essential partnerships, inadvertently driving our allies closer to economic rivals.”