What Trump's New Tariff Announcements Could Mean for Your Wallet
- How to File Your Taxes for Free With TurboTax This Year
- When Social Security Recipients Will Get Their Checks in April
- Dollar Scholar Asks: Should I Buy or Finance My Next Cell Phone?
- Dollar Scholar Asks: What Makes Compound Interest so 'Magical,' Anyway?
- When Are State Taxes Due? Here Are the 2025 Deadlines
Speaking from the White House's Rose Garden on Wednesday afternoon, President Donald Trump announced baseline tariffs of 10% on goods imported from other countries — and slapped certain nations with tariffs of up to 49%.
Trump's speech was part of what he termed Liberation Day, or "the day American industry was reborn."
Trump initially pitched expanded tariffs during his 2024 presidential campaign, framing them as a way to boost American manufacturing jobs. His inauguration kicked off a lengthy rollout: Since taking office in January, the White House has ordered tariffs, walked them back, reinstated them, adjusted them and expanded them. Wednesday's event centered around what the president called "kind" and "discounted" reciprocal tariffs on places like China (34%), the European Union (20%) and Cambodia (49%).
"Tariffs are going to give us growth like you haven't seen before," Trump said Wednesday.
Even before the latest round of tariffs, the protracted process had left Americans with anxiety and questions about what the impact to their wallets will be. Amid the uncertainty, how seriously should you take the headlines? What price increases can you expect? Is there any way to prepare?
Here are four things the back-and-forth over Trump's tariffs could mean for you.
Higher prices (eventually)
Though experts disagree on exactly how much, the general consensus is that Trump's tariffs will probably drive up prices as businesses pass along inflated costs to shoppers. Another unknown is the degree to which affected countries will retaliate with tariffs of their own.
According to the nonpartisan Budget Lab at Yale, the existing 25% tariffs on Canada and Mexico and the 20% tariffs on China will cost the average U.S. household between $1,602 and $2,002 a year depending on the level of retaliation.
These higher prices mean less flexibility in your budget. If you have to spend a larger percentage of your budget on groceries, for instance, then you might have a smaller percentage to spend on something else, like entertainment.
This may be especially devastating for low-income folks. Courtney Alev, Credit Karma's consumer financial advocate, says in an email that people who are already struggling to make ends meet will probably have less room to alter their financial behaviors as a result of tariffs.
That's risky because "if we see prices rise from tariffs, we could see people become more dependent on credit," Alev says, pointing out that credit card debt is already at a record high.
More internal debate about what you really need
Katie Klingensmith, chief investment strategist at Edelman Financial Engines, says companies are likely looking at substitute goods, which are comparable items that can be used for the same purpose, and price elasticity, which is how demand for something changes when its price changes, to determine what portion of increased costs to pass onto the consumer.
They may be fancy economic terms, but the two concepts will likely have a lot of influence over your day-to-day shopping decisions.
For example, if Trump's tariffs make bananas go from $1 to $2 a pound, and oranges remain $1 a pound, Target is going to try to predict to what extent you are going to substitute oranges for bananas so it can charge accordingly, Klingensmith says.
This, too, is different for everyone. You may be a casual smoothie-maker who sees bananas and oranges as roughly equal, so swapping them is no big deal. But your friend may be allergic to oranges, so switching is impossible.
"You just personally have to decide how much more you're willing to pay, and if you're going to pick a different good instead, and if there is another good that you can have if you're priced out of the banana market," Klingensmith adds.
Increased job anxiety
There's a lot of uncertainty swirling around.
Sticking with the banana example, maybe your local fruit supplier doesn't know whether he'll be able to afford to stay in business with the tariffs, so he's holding off on purchasing those new refrigerators he's been eyeing. Pulling back on spending could hurt refrigerator companies, especially if they've already seen a decrease in sales because everyone's postponing fridge purchases to make room in their budgets for more expensive bananas. In turn, maybe they pull back on hiring, further decreasing economic activity.
Of course, this is all hypothetical. The unemployment rate is 4.1%, which is still relatively low. But the outlook is dubious.
"Companies in general just don't know what to do," whether it's your employer or a firm you're invested in, Klingensmith adds. "They're having a hard time making planning decisions because they don't know what the laws and the rules and the taxes are going to be in three, six, nine, 24 months."
A wake-up call on what you can control (and what you can't)
The future is unclear, for sure, but it's not a reason to panic — or make rash changes to your broader financial plan. That includes your investment portfolio.
"It's really important to keep the long-term perspective and not get too caught up in the headlines," says Ben Bakkum, senior investment strategist at Betterment. "Because if you get spooked and kind of give up on the market, you're risking missing out on a recovery."
While you might not be able to control what the White House does or how other countries react, you can control whether you stay the course. And you should: Bakkum says that for disciplined investors, the recent market pullback is actually an opportunity to snag stocks at a discount.
If you're still feeling antsy, this is a great time to beef up your emergency fund, which should include enough money to cover your expenses for three to six months.
"Focus less on trying to predict the future and more on building and maintaining a financial safety net that can help you stay afloat, whether the economy is booming or struggling," Alev says.
More from Money:
Will There Be a Recession in 2025? 60% of Corporate Execs Think So
