How Tariffs Can Affect Your Wallet

Published on: Mar 18, 2021fb-roundtwitter-roundemail-round

When countries go head-to-head on trade policies, tariffs are the bargaining chip of choice. Because putting special taxes on foreign imports makes them cost more. So consumers won’t buy them as much. Then that country loses money.

Some countries that got tariff'd by President Donald Trump's administration: China, the EU, Brazil, and Argentina. And tensions are still high – even with a new admin in town. First order of business for new US trade rep, Katherine Tai: review Trump-era tariffs and trade policies.

The deets that matter for your wallet: Tariffs usually mean paying more for big-ticket and everyday items. Because many companies eventually pass on their higher cost of goods to customers. And it could mean bad news for your portfolio, too. Trade drama doesn’t usually sit well with investors. 

What you can do about it: Adding a little international flavor does not help make taxes more interesting or easier to digest. But understanding tariffs can help you prep financially, no matter what happens to them next. Here's how.

  • Keep an eye on price tags and your budget. Things that got more expensive when Trump’s tariffs first hit: speakers, outdoor furniture, and bedding. The good news: in March, the US and EU called a temporary truce on wine tariffs. Cheers. 

  • Stick with your long-term investing strategy. The Dow Jones (an index of 30 big US companies often used as a benchmark for the overall market) had some rough days in response to trade news during the last admin. Bright side: it recovered, and then some, every time. So it goes with stocks throughout history. 

theSkimm: There’s not much you can do to mitigate the impact of tariffs...aside from comparison-shopping and adjusting your monthly budget to make up the difference. Not fun. But smart.

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Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus