A trade war is kinda like chess. It’s all about strategy, there are pawns (imports and exports), and it can be hard to tell who’s winning. See: the game the US and China have been playing for over a year. And the new one the US and EU are flirting with.
Here’s how trade wars can affect your wallet.
You could do a double take at the register. The tariffs (aka taxes countries add to each other’s goods) used to fight trade wars make imported stuff more expensive. Think: cars from Germany, smartphones from China...and a bunch of other not-so-obvious products. Exhibit Chick-Fil-A: if pressure cookers from China get more expensive, experts say your spicy chicken sandwich could, too.
You (and the economy) might need a pep talk. Consumer confidence (how people feel about the economy today and where it’s going) tends to drop during a trade war. And when shoppers are in a glass-half-empty mood, they tend to spend less. Good for savings accounts...not great for American businesses, stock prices, and the overall economy.
You could get a break on interest rates. When there’s economic drama, all eyes turn to the Federal Reserve (America’s central bank). Because it can do things like lower interest rates to encourage people to spend more. Lower interest rates usually mean lower credit card, car loan, and mortgage rates. Silver lining.
theSkimm: Trade wars and a thriving economy don’t usually go hand in hand. That can cause a ripple effect on pretty much every area of your finances. Maybe even your feelings. (In which case...may we suggest browsing #puppiesofinstagram?) If higher prices start to bring down your budget, look for some easy places to cut back.
Related: How to ‘50/20/30’ Your Budget