The Escalation of US-China Tariffs: LPMs Offer Resilience in a Fragmented Global Economy
Following the implementation of sweeping 104% US tariffs on Chinese exports and the reverberating effects across Asian markets, 8B provides analysis on how these macroeconomic shifts impact Local Payment Methods (LPMs)—the core infrastructure enabling resilient commerce in emerging economies. As a platform focused on empowering localized payment rails and PSPs, 8B emphasizes that LPMs are not only vital under normal conditions, but crucial in times of geopolitical and financial disruption.
Tariff Shocks Roil Markets and Currency Stability
On April 9, the White House confirmed reciprocal tariffs had gone into effect, with 104% duties imposed on Chinese exports. Exemptions apply only to goods already in transit arriving by May 27, 2025 (Reuters). Additional levies on pharmaceuticals and small parcels under $800 are expected. In response, China announced 84% retaliatory tariffs on US goods effective April 10 and export controls on rare earths (Al Jazeera).
Despite the shock, Greater China markets rebounded after initial losses, bolstered by state-backed fund interventions and regulatory pledges. The PBOC set the yuan reference rate at 7.2066—a fifth straight devaluation—while the offshore yuan briefly touched a record low of 7.4290 (Bloomberg).
Meanwhile, Premier Li told European Commission President von der Leyen that Beijing has "ample policy tools to fully offset external shocks" (Euronews).
Central Banks Move to Stabilize Growth
Across Asia, regional indices fell sharply:
- Taiwan activated a $15B stabilization fund as its index dropped 18% in a week.
- Vietnam fell 16%, while Thailand hit its lowest since March 2020.
- South Korea announced KRW3T ($2B) in emergency funding for its auto sector, targeted by upcoming chip and pharma tariffs (Reuters, Bloomberg).
In response, central banks have adopted easing policies:
- RBNZ cut rates by 25bps and highlighted room for further action.
- RBI moved to an “accommodative” stance with rate cuts to offset tariff risks.
- BOJ Governor Ueda affirmed that Japan is monitoring trade developments before policy adjustment.
Implications for Local Payment Methods (LPMs)
8B highlights four key risks and opportunities affecting LPMs:
- FX Volatility: Declining currencies—yuan, rupee, rupiah, won—expose FX-dependent payment corridors to pricing instability.
- Policy-Backed Domestic Infrastructure: Governments are injecting capital and regulatory flexibility into local payment ecosystems to maintain liquidity and consumer trust.
- Protectionism and Regulatory Drift: Rising non-tariff barriers increase the cost of compliance for international PSPs while elevating the strategic role of local providers.
- Differential Impact Across Asia: LPMs in India and Indonesia, with systems like UPI and PromptPay, may prove more resilient than card-based networks under macro stress.
Global Card Networks vs. LPMs: Strategic Differences in Resilience
As global commerce fragments, LPMs have emerged as the infrastructure of choice in volatile regions, providing both resilience and flexibility in uncertain times.
"Payment systems are the foundation of economic continuity during stress," said a spokesperson for 8B. "We remain committed to building resilient, locally anchored infrastructure that supports merchants, PSPs, and consumers—regardless of global headwinds."
References
- Reuters (April 9, 2025). US-China trade tensions deepen with reciprocal tariffs.
- Bloomberg (April 9, 2025). PBOC sets yuan lower for fifth straight day.
- Al Jazeera (April 9, 2025). China retaliates with 84% tariff and rare earth export bans.
- Euronews (April 9, 2025). China outlines policy tools to offset shocks.
- CNN Business (Nov 2023). Visa vs Mastercard: A Clear Comparison.
- The Paypers (Feb 2025). The Future of Payments Is Local.
- Stax Payments (Dec 2024). Mastercard vs Visa Explained.
- Komoju Insights (Feb 2025). Why Local Payment Methods Are Important.
- McKinsey & Company (Jan 2024). The Future of Payments in Emerging Markets.
- Financial Times (Mar 2025). Local Payment Methods Gain Ground Amid Global Uncertainty.
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About 8B
8B operates in hard-to-reach markets, with strong expertise in the Caucasus and Central Asia. The company provides localised payment access, regulatory support, and the ability to work with local currencies. With acquiring licenses in Central Asia, Europe, and North America, we ensure compliance and smooth transactions. Our solutions help global PSPs and businesses navigate fragmented financial systems efficiently. 8B is a trusted partner for PSPs expanding into emerging markets.
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