Recently, most peer-to-peer (P2P) applications ignore traffic costs at internet service providers (ISPs), and thus generate a large amount of traffic crossing ISPs or autonomous systems (ASes) on the Internet. To reduce the cross-ISP/AS traffic, the existing approaches introduce network-aware strategies in which a lot of modifications of P2P systems are required. In this paper, we propose a router-aided method for localizing P2P traffic hierarchically with multiple levels. By intentionally limiting the bandwidth of each connection path between peers based on geographical location of the peers' destinations, the traffic can be localized. Compared to the existing locality-enhancing approaches, our proposed method does not require dedicated servers, cooperation between ISPs and users, or any modification of existing P2P application software. Therefore, the proposal can be easily utilized by all types of P2P applications. The experimental results obtained with a P2P streaming application show that our proposed method successfully realizes P2P traffic localization by discouraging connections with faraway peers due to the bandwidth limitation.