Did Trump Tariffs Kill The Fintech IPO Market? The Affirm (AFRM) Example

Chloe Fitzgerald

4 min read

Post on May 14, 2025

4.7

Share

The Trump Tariff Policy and its Economic Effects

The Trump administration implemented a series of tariffs, primarily targeting steel, aluminum, and goods from China. These protectionist measures aimed to boost domestic industries but had far-reaching economic consequences.

Overview of the Trump Tariff Strategy

• Steel and Aluminum Tariffs: These tariffs, imposed in 2018, aimed to protect American steel and aluminum producers.
• Tariffs on Chinese Goods: Throughout Trump's presidency, escalating tariffs were levied on a wide range of Chinese goods, impacting various sectors.
• Increased Trade Uncertainty: The unpredictable nature of the tariff policy created significant uncertainty in global markets, affecting investor confidence.

This uncertainty fueled volatility in financial markets and dampened investment sentiment. Businesses faced increased costs and difficulties in planning for the future, affecting investment decisions across various sectors, including Fintech.

Ripple Effects on Investment and Lending

Tariffs increased input costs for businesses, reducing profitability and impacting investment.

• Supply Chain Disruptions: Tariffs disrupted global supply chains, forcing companies to find alternative, often more expensive, sources of materials.
• Reduced Business Investment: Facing higher costs and uncertainty, businesses cut back on investment, including venture capital funding for startups.
• Impact on Lending: Financial institutions became more cautious in their lending practices, reducing the availability of capital for both established companies and Fintech startups seeking IPOs.

This reduction in available funding directly affected the pipeline of Fintech companies considering an IPO.

The Affirm (AFRM) IPO: A Case Study

Affirm, a leading Buy Now, Pay Later (BNPL) Fintech company, went public in January 2021. Its IPO provides a useful lens through which to examine the potential impact of Trump-era tariffs on the Fintech IPO market.

Affirm's Business Model and Market Positioning

Affirm's business model centers around providing point-of-sale financing to consumers.

• Buy Now, Pay Later: Affirm's BNPL services allow consumers to pay for purchases in installments, offering an attractive alternative to traditional credit cards.
• Key Competitors: Affirm competes with other BNPL providers like Klarna and PayPal's services.
• Revenue Streams: Affirm generates revenue through merchant fees and interest charges on consumer loans.

While Affirm's operations were primarily domestic, the broader economic climate, potentially influenced by tariffs, certainly impacted investor sentiment and market conditions.

The Timing of Affirm's IPO and Market Conditions

Affirm's IPO occurred after the most significant wave of tariff increases under the Trump administration.

• Stock Market Performance: While the stock market experienced periods of growth and volatility, the overall climate reflected lingering uncertainty about the economic fallout from the trade war.
• Investor Sentiment: Investor sentiment was cautious due to the persisting effects of tariffs and broader economic uncertainty.

It's difficult to definitively state that tariffs directly impacted Affirm's IPO valuation or immediate success. However, the overall cautious market climate likely played a role.

Post-IPO Performance of AFRM

Affirm's post-IPO performance reflected the broader volatility in the tech sector.

• Stock Price Fluctuations: AFRM's stock price experienced significant fluctuations, mirroring the broader market trends.
• Financial Performance Indicators: While Affirm showed growth, its performance needed to be viewed within the context of the broader economic slowdown and the competitive BNPL landscape.

Comparing Affirm's post-IPO trajectory with other Fintech IPOs during the same period would require a more in-depth comparative analysis.

Alternative Explanations for Fintech IPO Trends

While the Trump tariffs created an atmosphere of economic uncertainty, it's crucial to consider other factors that influence the Fintech IPO market.

The Broader Technological Landscape

Rapid technological advancements and increased competition shaped the Fintech landscape.

• Technological Disruptions: Constant innovation and disruption within Fintech influenced investment decisions and company valuations.
• Regulatory Changes: Evolving regulations in the Fintech sector added another layer of complexity for startups seeking IPOs.
• Intense Competition: The competitive nature of the Fintech industry influenced investor choices and the overall success of IPOs.

Overall Economic Climate

The global economic climate played a significant role, independent of tariffs.

• Global Economic Slowdown: Concerns about a global economic slowdown contributed to investor hesitation.
• Interest Rate Changes: Changes in interest rates also impacted the attractiveness of Fintech IPOs.

These macroeconomic factors often overshadowed the direct impact of tariffs.

Conclusion: Did Trump Tariffs Kill the Fintech IPO Market? The Affirm Case Revisited

While the Trump administration's tariffs created economic uncertainty, directly linking them to a significant decline in Fintech IPOs, including Affirm's performance, is challenging. While the increased costs and supply chain disruptions associated with tariffs likely contributed to a more cautious investment climate, other factors – including broader economic conditions, technological disruptions, and intense competition within the Fintech sector – likely played more significant roles. The Affirm (AFRM) IPO serves as a case study reflecting the complexities of this issue. A more comprehensive analysis comparing Affirm's performance against other Fintech IPOs during the same period would be needed to draw stronger conclusions. Understanding the interplay between trade policy and the Fintech IPO market requires continued analysis, so let's further explore the effects of trade policies on Fintech IPOs.