The recent return of Donald Trump’s tariff-first trade agenda has reignited global market tensions. From sweeping levies on Chinese goods to looming tariffs on electric vehicles and critical manufacturing inputs. The message is loud and clear: economic protectionism is in session.
As the US doubles down on trade barriers, the ripple effects are already being felt far beyond Washington. Earlier this quarter, The Wall Street Journal reported that China’s exports to the U.S. dropped by 21% in April 2025 alone, following a dramatic 145% increase in average U.S. tariffs during Trump’s first 100 days back in office. Facing higher barriers, Chinese exporters have been redirecting shipments toward Southeast Asia, Latin America, Africa and the EU in an effort to offset declining US demand.
Countries like Vietnam and India are seizing the moment. Vietnam’s trade activity hit record highs this spring, with imports from China topping $15 billion, and exports to the U.S. seeing a 34% year-on-year increase. Meanwhile, India is positioning itself as a longer-term manufacturing hub, with major firms, including Apple, considering shifting US-bound production away from China.
As global manufacturing routes shift, supply chains are being rewired and margins are under pressure. Amid this global recalibration, small and medium enterprises (SMEs) are feeling the sharpest edge of this policy shift. Tariffs aren’t just political instruments; they are direct threats to SME financial stability and overall operations.
From payment delays and currency shocks, to supply chain collapses and contract losses, tariffs inject volatility at every stage of financial operations. For SMEs already operating on thin margins, the impact can be substantial.
Not just a trade war, but a financial disruptor
While tariffs introduce an immediate spike in the cost of imports or exports, their ripple effects stretch far and wide. As margins are squeezed, businesses are forced to delay payments, renegotiate contracts and rethink supplier relationships. This uncertainty bleeds into financial operations, where delayed settlements and unplanned expenses disrupt the careful balance of working capital.
For SMEs that are locked into pre-tariff supplier agreements or depend on single-market sourcing, managing FX becomes even more challenging. Limited supplier flexibility often means transacting in the same currencies regardless of volatility, increasing an organisations exposure to unpredictable exchange rate shifts. Delayed payments or extended settlement timelines can further widen the FX risk window, making it harder to forecast costs or protect margins.
And, while multinationals may absorb shocks through diversification and scales, SMES are often at the mercy of single routes or partners, making trade policy shifts existential, not just inconvenient.
Rewiring the global supply map
Much of the focus has rightly been on China, the largest target of current tariffs, but the situation is more complex than a US-China standoff. China, which exports significantly more to the US than it imports, has limited means to retaliate through reciprocal tariffs. Instead, its exporters are being forced to find new markets, often selling raw materials or semi-finished goods at discounted prices.
This shift opens up opportunities for manufacturing hubs like Vietnam, India, Cambodia and South Korea. These economies, which are equipped with strong production capacity, are increasingly absorbing Chinese components and then re-exporting to the U.S.
From a financial infrastructure perspective, this re-routing adds a new layer of complexity. What was once a single US-China transaction may now involve five or more, for example, China to Vietnam for assembly, then Vietnam to the US, plus supporting payments across multiple vendors, currencies and jurisdictions.
In the short term, this creates friction, but in the long term, it’s an opportunity for adaptable SMEs and financial providers that support them.
Using global financial infrastructure as a strategic lever
SMEs need real-time visibility over their transactions, exposure to currency shifts and the ability to pivot payment flows as supply chains evolve. That means adopting platforms that enable flexible routing, automate foreign exchange (FX) decisions and support compliance across regions.
The current tariff regime may not be sustainable long-term, as negotiations and adjustments will inevitably follow. What’s clear is this, the financial aftershock for SMEs will persist well beyond any political cycle. SMEs caught in the crossfire must equip themselves with the tools and partnerships to weather uncertainty and unlock new paths to resilience.
In this environment, adaptability is currency, and the businesses that are best prepared to move money, manage volatility and re-route payments at a pace will be the ones that thrive.
