The news: President Donald Trump imposed sweeping tariffs that could significantly alter consumers’ spending habits.

• After a month of delays, Trump imposed 25% tariffs on Mexico and Canada before adding last-minute exemptions to goods that fall under USCMA (about half of all imports from Mexico and 38% from Canada) until April 2.
• The administration also added another 10% tariff on Chinese imports.

China and Canada have since announced retaliatory tariffs. Prime Minister Justin Trudeau said Canada “will continue to be in a trade war that was launched by the United States for the foreseeable future.”

Why it matters: A trade war could ripple throughout the payments industry. More than three-quarters (76%) of US consumers plan to reduce spending if tariffs cause prices to rise, according to a survey by CivicScience.

• Companies are expected to pass on the entire cost of tariffs to the consumer, according to Raphael Bostic, president of the Federal Reserve Bank of Atlanta.
• Assuming this, Trump’s tariff plan for China, Canada, and Mexico would add an additional $3,342 to annual expenses for a family of four, according to ING.

What it means for credit card issuers:

• Any pullback in spending would result in slowed credit card volume growth for issuers.
• And as prices stretch budgets, consumers could trade down to debit cards to avoid overspending and racking up debt.
• Tariff’s effect on essentials like groceries and gas means budget-stretched consumers who do keep paying with credit may exacerbate already elevated delinquency levels.

What they’re saying: Credit card issuers remain positive that they can withstand any tariff headwinds.

• JPMorgan Chase COO Jennifer Piepszak said the bank is "cautiously optimistic" at a Bank of America conference. She reiterated that “the underlying economic environment is still very strong.”
• Citi CEO Jane Fraser said that despite the tariffs, “2025 doesn't look that different from '24,” during the issuer's Q4 earnings call.

Retailers have been far less sanguine, and issuers—particularly those with retail co-brand cards—will feel those effects on their card portfolios.

Our take: Uncertainty abounds when it comes to tariffs, their scope, and their impact on the economy.

But a trade war is already here, and we expect it will draw out the credit card recovery. Slower volume growth and elevated delinquency levels will prevent issuers from seeing any meaningful improvement in the short term.

Dig deeper: To learn more about how tariffs will roil the retail landscape, read our Retail & Ecommerce Briefing’s analysts’ take.