Navigating Your Finances as Trump Tariffs Come Into Play

In March, President Donald Trump implemented several tariffs, featuring a general 20% tariff on imports from China, a 25% charge on goods from Canada and Mexico deemed non-compliant with the United States-Mexico-Canada Agreement, and a 25% tariff on all imported aluminum and steel.

Another set of tariffs with yet-to-be-disclosed rates is anticipated to take effect on April 2. On March 30, Trump mentioned these could extend to “all countries.” However, in recent weeks, the President has postponed some proposed tariffs or indicated he would be “flexible” regarding enforcement in specific scenarios.

While tariffs have the potential to increase prices, experts are uncertain about when or how significantly this will occur. This ambiguity has left many Americans anxious about the economy and rising costs: Consumer confidence in future conditions fell to a 12-year low in March, according to the Conference Board.

“Recent developments have left people puzzled about how to budget effectively, as they remain unclear on how prices might fluctuate in the months ahead,” notes Lawrence Sprung, a certified financial planner based in Long Island, New York.

Here are some strategies to prepare.

Although you can’t control price volatility or market fluctuations, you can manage where your money is allocated, explains Catherine Irby Arnold, senior vice president and Washington market leader for U.S. Bank.

“At times, it may feel like everything is overwhelming, yet it’s crucial to focus on areas you can control and where you can make a meaningful difference,” she advises.

Review your monthly expenses and consider whether there are areas where you can cut back. For instance, is your habit of buying a $6 coffee multiple times weekly still viable?

“For the majority, the best approach is simply to remain mindful,” suggests Jason Gilbert, founder and managing partner of RGA Investment Advisors.

If possible, incorporate flexibility into your existing spending plan. Regardless of whether you create a detailed budget, it’s wise to evaluate your monthly fixed costs and see if there’s an opportunity to create a cushion,” Gilbert states.

Sprung concurs. “Being flexible is crucial right now,” he remarks.

“Ensure your emergency fund remains healthy, steer clear of unnecessary debt, and don’t allow headlines to dictate your decisions,” Gilbert advises. “Financial stability is key for achieving peace of mind, irrespective of what the news cycle presents.”

Experts typically suggest setting aside three to six months’ worth of expenses for emergencies. However, they recommend considering a bit more in your fund to accommodate potential price shifts that could raise unforeseen costs, like auto repairs or the need to replace a computer or phone.

If you’re just beginning to establish this fund, remember that three to six months’ worth of expenses is a goal, and every bit you can set aside for a crisis is beneficial. Can you only save $20 to $30 per month right now? That’s still a worthwhile contribution, according to Irby Arnold.

Automating the savings process can simplify things. If possible, direct a portion of your salary straight into your emergency fund, Irby Arnold suggests. Setting this up “serves dual purposes,” she adds. “It encourages you to live within your means while ensuring your savings plan remains active.”

Given the uncertainty surrounding tariffs and other potential price changes, Sprung advises exercising caution with major purchases, such as cars, home appliances, and repairs. It may be wiser to wait until you have clearer insight into how costs could shift, he insists.

“The imposition of tariffs has shown to be quite fluid, and consumers must make informed decisions about whether they can afford to wait and see how these tariffs are applied and at what rates,” he explains.

Many of Irby Arnold’s clients have started to hold back and postpone significant purchases, she notes.

“Being cautious about spending can be harmless to your financial objectives, as long as you continue to invest in other areas consistently,” she adds.

Your optimal moves will depend on your individual circumstances. It may be beneficial to seek advice from a financial professional. If you’re concerned about your car’s longevity, it might be prudent to shop for a new vehicle “sooner rather than later,” Sprung suggests, especially if you find one within your budget.

“Ultimately, consumers will still be able to acquire the goods they desire or need, but they may face higher prices later if tariffs are enacted,” he notes.

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