Tariffs are taxes imposed on goods imported from other countries. When the U.S. government applies tariffs, the cost of these goods increases. While this might seem like a purely business issue, it affects everyone, especially how we send and receive money across borders. Whether you send money abroad, shop internationally, or use services like PayPal or Wise for cross-border payments, U.S. tariffs can change the fees, exchange rates, and the speed at which your money moves.
How Tariffs Influence the Cost of Global Payments
More Expensive Products, Weaker Currency
Tariffs make imported goods more expensive. In response, some countries may let their currencies drop in value to stay competitive. However, a weaker currency means that sending money to or from those countries becomes costlier. For example, if you are sending money to a country with a weaker currency, you might need to send more money to achieve the same value as before.
Delays in Payments and Shipping
When tariffs create tension between countries, it can slow down trade. This means delays in shipping goods and even in making international payments. Platforms that rely on fast money movement, like Revolut or Payoneer, might experience hiccups in service. For businesses, this can mean longer wait times for payments and increased operational costs.
The Digital Wallet Dilemma
Apps like PayPal, Skrill, and mobile wallets like Google Pay or Apple Pay offer quick and affordable cross-border payments. However, tariffs can:
- Increase their operating costs
- Add exchange rate volatility
- Force them to follow stricter regulations
As a result, consumers may see new fees or slower services when sending or receiving money internationally. This can be particularly challenging for individuals who rely on these services for regular transactions.
Real Examples: Countries and Companies Respond
China and the Rise of the Yuan
To reduce its reliance on the U.S. dollar, China is pushing more international transactions in its own currency (the yuan). It’s also expanding its Cross-Border Interbank Payment System (CIPS), a competitor to SWIFT. This move aims to provide an alternative payment system that is less affected by U.S. tariffs and economic policies.
U.S.-Europe Trade Tensions
When the U.S. added tariffs on European products like steel and wine, Europe responded with their own tariffs. This trade battle added pressure on banks and payment companies operating between the regions. Companies had to adjust their fees and services to accommodate the new economic realities, which often resulted in higher costs for consumers.
What This Means for You
If you:
- Send remittances to family abroad
- Freelance for global clients
- Shop on international websites
- Travel and use foreign cards
… then U.S. tariffs can raise the cost of your transactions, limit your options, or even delay transfers. Understanding the impact of tariffs can help you make more informed financial decisions.
How to Protect Yourself as a Consumer
Use Multi-Currency Accounts
Services like Wise or Revolut let you hold money in different currencies. This can help you avoid the pitfalls of fluctuating exchange rates and reduce the impact of tariffs on your transactions.
Compare Rates
Always check fees and exchange rates before making an international payment. Different platforms may offer varying rates and fees, so doing your research can save you money in the long run.
Stay Informed
Understand the political and economic changes that may affect your financial tools. Keeping up with news about tariffs and trade policies can help you anticipate changes and adjust your financial strategies accordingly.
Final Thoughts
While U.S. tariffs may seem like a topic for economists or politicians, they directly affect how we send and receive money around the world. Understanding these changes can help you make better choices, save on fees, and avoid surprises. By staying informed and using smart financial tools, you can navigate the complexities of global payments more effectively.
References
- JPMorgan: U.S. tariffs and global trade
- Reuters: China’s plan to boost cross-border financial services
- FXC Intelligence: Impact of US trade tariffs
- Forbes: How tariffs change cross-border payments
- American Banker: U.S. tariffs and payments
