How Global Trade Deals and Economic Uncertainty Shape Consumer Financing in 2025

Introduction: Trade Winds and Financial Crosscurrents

If recent economic headlines have left you dizzy, you’re not alone. Global trade developments—especially the on-again, off-again U.S.-China tariff saga—have been rattling markets and consumer confidence. Meanwhile, economic uncertainty and hints of recession are putting both consumers and businesses on edge. It’s a bit like sailing in choppy waters: one moment a trade deal calms the seas, the next, a new tariff squall kicks up.

In 2025, this backdrop is having a real impact on consumer behavior and business strategies, particularly how people pay for things, fueling a turn toward more flexible financing at checkout.

In this blog, we’ll explore how U.S.-China trade agreements and economic jitters—from a GDP dip in Q1 2025 to persistent inflation—are driving Americans toward alternative financing solutions. We’ll also cover why POS financing and waterfall financing are becoming critical to sustaining consumer spending.

Global Trade Deals Rattle – and Rally – Consumer Confidence

Trade headlines have dominated 2025. Early in the year, escalating tariffs between the U.S. and China had consumers and businesses bracing for the worst. In April, the U.S. sharply increased duties on Chinese goods, up to 125%, and China retaliated. Consumer sentiment plummeted, with the University of Michigan Index falling to 50.8, one of its lowest readings ever. Inflation expectations surged to 6.7%—the highest since 1981—as Americans braced for higher prices.

Then came a surprising truce: in May, Washington and Beijing reached a 90-day deal to slash tariffs. The U.S. rolled back tariffs from 145% to 30%, and China cut its duties to 10%. Markets rallied, stocks surged, and recession fears eased—briefly.

But this peace is fragile. Experts warn that trade policy uncertainty remains high, with the potential for new flare-ups. Ryan Sweet of Oxford Economics noted that while the deal reduced recession odds to 35%, another escalation could easily reverse that. Supply chain executives still peg the chance of recession at 75% or higher.

Businesses face tough decisions: delay investments, cut costs, or outsource abroad to mitigate tariff risks. For consumers and companies alike, it’s a rollercoaster of sentiment, swinging between caution and optimism with every new headline.

Economic Headwinds: Inflation, Rates, and Recession Fears

Beyond trade, several economic headwinds are blowing in 2025. The U.S. economy contracted by 0.3% in Q1 2025, the first shrinkage since 2022. Inflation remains stubborn, and though the Federal Reserve started easing rates in late 2024, borrowing costs remain high after 14 months of elevated rates, the longest stretch in decades.

Here’s a quick snapshot of key economic signals:

• GDP contraction: Q1 2025 saw a 0.3% decrease, after a +2.4% Q4 2024 gain.
  
  
• Consumer sentiment: Index fell to 50.8 in April, reflecting deep economic worries.
  
  
• Inflation expectations: Jumped to 6.7%—the highest since 1981.
  
  
• Interest rates: Fed’s key rate sits at 4.25–4.50%, far above pre-2020 levels.
  
  
• Credit costs: Average credit card APR hit 24.2% in early 2025.
  
  

Consumers are feeling squeezed. Prices are up, credit is more expensive, and wages aren’t keeping pace. With credit card APRs above 24%, financing big purchases is costly. Banks, wary of recession risks, are tightening credit standards just when consumers need access the most.

This is the environment where alternative financing becomes a financial lifeline.

Consumers Turn to Alternative Financing Amid Uncertainty

In uncertain times, consumers change how they pay. In 2025, more people are turning to alternative financing and flexible payment plans instead of costly credit cards.

Buy Now, Pay Later (BNPL) services have surged in popularity, offering zero or low-interest options that appeal to budget-conscious shoppers. A Federal Reserve survey found that over 60% of BNPL users cited avoiding interest charges as their top reason for using these services.

Some consumers have little choice—many near their credit limits rely on BNPL to afford essentials. A Fed study found 35% of people near their credit limits used BNPL last year, compared to just 8% with ample credit access.

Merchants have noticed. Offering POS financing boosts sales. Customers spend 15–30% more on average when financing is available at checkout. Financing options can lift conversion rates by up to 20%, turning hesitant shoppers into buyers. In a tough economy, that’s a game-changer.

The Rise of Embedded and Waterfall Financing Solutions

To meet consumer demand, businesses are embracing embedded financing and waterfall financing.

• Embedded financing integrates payment options directly into the shopping experience, offering installment plans at checkout without sending customers to a separate lender.
  
  
• Waterfall financing goes further, routing applications through multiple lenders—from prime to subprime—maximizing approval chances.
  
  

This approach delivers key advantages:

• Higher approval rates: Multi-lender platforms can increase approvals by 30% or more, helping merchants serve a broader range of customers.
  
  
• Seamless user experience: A single application yields multiple offers instantly, keeping checkout friction low.
  
  
• Risk mitigation: Multiple lenders reduce reliance on any single financing source.
  
  
• Stronger sales and loyalty: Flexible payment options boost sales and build long-term customer trust.
  
  

FinMkt: Supporting Merchants and Consumers When Credit Gets Tight

FinMkt provides merchants with a comprehensive financing solution, enabling them to offer flexible financing options directly to their customers. Through FinMkt’s multi-lender platform, merchants can expand access to credit, helping customers find affordable payment plans that suit their needs—all through a single, streamlined solution.

Behind the scenes, FinMkt connects to a diverse lender network—prime, near-prime, and alternative—matching customers with the best loan offers. Approval rates rise, and businesses expand access to credit across customer segments.

FinMkt’s platform isn’t just about more approvals—it’s about affordable, transparent options. Borrowers can compare offers, such as a 0% promotional plan or longer-term financing, and choose what best fits their budget.

When lenders tighten credit, FinMkt’s waterfall model ensures merchants still have financing options available. By stacking lenders and offering a range of solutions, FinMkt helps businesses avoid lost sales, even when economic conditions are tough.

Conclusion: Adapting and Thriving with Flexible Financing

In a year defined by global trade drama and economic uncertainty, one thing is clear: flexibility wins. Consumers want options at checkout, and businesses that provide them will thrive.

FinMkt’s embedded financing and waterfall lending platform make it easy to integrate multiple financing solutions, helping businesses boost sales and sustain consumer spending power when it’s needed most.

Don’t let global uncertainty hold your business back. Equip your checkout with the financing tools today’s consumers demand. Contact FinMkt to learn how our solutions can help your business grow—even when the road gets bumpy.

Empower your customers with affordable financing options, and watch loyalty and sales grow. It’s not just about surviving economic storms—it’s about helping your customers thrive through them.

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Sources: Data referenced from the U.S. Bureau of Economic Analysis, Federal Reserve surveys, and industry research.