What should you do (and not do) with your money because of Trump’s tariffs? We asked the experts

Americans have been dealing with painfully stubborn inflation for almost four years. Now, you could face a new cost-of-living challenge: tariffs.

In the weeks since President Donald Trump kicked off his second term, consumers and investors have been whipsawed trying to predict whether the chief executive will follow through on his threats to impose higher import taxes on almost all U.S. trading partners. Trump has officially implemented 10 percent levies on all products from China (which he hinted might only be a starting point) and proposed additional 25 percent duties on all steel and aluminum imports, as well as goods from Canada and Mexico. He’s even opened the door to reciprocal tariffs targeting countries that impose duties on U.S. products.

The range of economic outcomes seems to be unlimited. At worst, economists say, tariffs could lead to higher prices, supply shortages, weaker economic growth, a tit-for-tat trade war that threatens to remake the global economy and — if bad enough — rate hikes from the Fed. At best, proponents say tariffs might resettle global trade imbalances and make U.S. manufacturing more competitive. They might also be called off or fail to come to fruition, used only as a negotiation tactic instead.

As uncertainty grips the news cycle, even the most steadfast of personal finance practitioners may be tempted to sway from the timeless advice of tuning out the noise and staying the course with their savings or investments. Yet, experts interviewed by Bankrate want Americans to know there’s a reason that advice is tried-and-true: It works.

So where does that leave you? We asked four experts what Americans should (and should not) do with their finances. While there’s not so much you can do on the geopolitical front, there is plenty you can do with your own spending and budgeting. Here’s what they recommended.

Avoid impulse buying or ‘panic purchases’

How much tariffs could end up costing Americans is unknown. The typical household might lose about $223 in disposable income with 10 percent tariffs on products from China, the Budget Lab at Yale University predicts. If Canada and Mexico’s tariffs are added into the mix, that hit could amount to about $1,250, on average.

Meanwhile, if 10 percent “reciprocal” tariffs are implemented on all U.S. trading partners and levies on China surge to the 60 percent rate that Trump floated on the campaign trail, the average household might lose about $2,400, researchers at the Budget Lab also found.

The U.S. imported about $3.4 trillion worth of goods in 2024, with about two-fifths (or 41 percent) coming from Mexico, China and Canada, according to data from the U.S. Census Bureau. Electronics, vehicles and homes could see some of the toughest price hikes, though inputs for other finished products such as lumber, steel and aluminum could ripple throughout the economy, too, economists say.

Many Americans aren’t in the best financial shape to afford another surge in prices. More than 2 in 5 Americans (43 percent) say they would need to take out a loan if they were confronted with an unexpected $1,000 expense, according to recent Bankrate polling. Meanwhile, nearly half of Americans with a credit card (48 percent) carry a balance month to month, up from 39 percent in 2021, a separate poll found.

Americans might feel tempted to make their purchases now, before prices surge. Yet, as interest rates remain elevated, and many Americans already indicate that they have insufficient levels of savings, Americans might be better off focusing on other financial goals, according to Mark Hamrick, Bankrate senior economic analyst.

On the other hand, if you’ve already budgeted for your big-ticket purchase, there might not be much sense in waiting, he says.

“Where might I say it is OK to bring forward a purchase? That would be for big-ticket items, such as appliances or other durable goods that one has budgeted for and has saved for,” Hamrick says. “Otherwise, I wouldn’t advise changing purchasing plans based on tariffs.”

If you aren’t ready to make a big-ticket purchase just yet, consider saving a little bit more for it

No one knows for sure how much tariffs could push up prices on the items Americans both need and want. Sometimes, companies might have no choice but to eat into their profit margins, out of fear that consumers could be too sensitive to a price hike. Other times, they might choose to distribute those higher costs, raising prices on items that aren’t even levied.

For example, Trump’s first-term tariffs on washing machines from 2018 led to simultaneous price hikes on dryers, too, according to joint research from the University of Chicago and Federal Reserve.

Still, if you know you’re going to have a big-ticket purchase coming up, it might be wise to save a little more for it, according to Dave Zavarelli, CFP, financial planner at LPL Financial. As a rule of thumb, Zavarelli says he’s been recommending clients save an extra 25 percent — the highest current tariff rate — for their purchase.

Yet, any little extra bit you can afford to save will help, Zavarelli adds. Other goals could be adding another month to one’s emergency fund or increasing your savings contributions by any amount you can afford. Even if prices don’t end up surging that much, you’ll at least have money that you can recycle back into your emergency fund.

“Being a little more liberal with how much you’re putting away protects you from a surprise price increase,” Zavarelli says. “That gives you a little peace of mind and can help people whether that unknown storm.”

‘Stress test’ your financial plan

There’s a reason financial experts also call your emergency fund your sleep-well-at-night money. Knowing you have at least some cash buffers to protect your finances from tougher economic times can help calm your nerves.

That’s why Andy Smith, CFP, financial planner at Edelman Financial Engines, typically walks his clients through how to run their finances through a “stress test.” Some scenarios could include:

• If you went through a spell of unemployment, what funds would you need to make ends meet?
• If financial markets faced a correction, how diversified is your portfolio?
• What are you currently spending your money on, and how could a slight increase in those expenses impact your budget?
• What spending would you plan to cut back on if your disposable income declined?

Many Americans might find that their portfolio is better positioned to weather volatility than they think. They might also find clear action items, such as trimming back on expenses.

Above all, the goal is reassuring yourself that you have a plan to “break glass” in case of an emergency.

“People would be surprised about how little they really know about what’s coming in and what’s going out,” Smith says, referring to Americans’ budgets. “If you’re worrying about it at 3 a.m., thinking you’ll never be able to do X, Y, Z, put that plan together and then test it. In your head space, nothing can really get done.”

Comparison shop and price check

With or without tariffs, Americans can stand to save any time they price check, comparison shop and swap pricier items for cheaper ones. In the aftermath of post-pandemic inflation, they might already be used to shopping around. Take egg prices, for example. They’ve more than doubled since the pandemic-induced recession began in February 2020, rising 15 percent in the past month alone, according to a Bankrate analysis of the latest consumer price index (CPI).

“Many households have been thrust into the question of, ‘Well, if we usually have eggs for breakfast, what do we have instead?’” says Christine Benz, director of personal finance and retirement planning for MorningStar. “As consumers, we’re making these decisions all the time. Just make sure you’re not automatically reaching for goods that have seen dramatic escalations in price and be mindful about the trade-offs that you’re willing to make.”

Benz advises keeping a close eye on your weekly grocery store bill. If you notice any jumps from week-to-week, you might want to consider identifying the culprit of the increase — and see if you can make any substitutions.

Researching prices across a range of retailers before you make any purchase can also help ensure you get the best deal possible. Not to mention, some chains — such as Best Buy, Target or Lowe’s — will match prices if their competitors are offering any cheaper deals. Familiarizing yourself with the policies of any retailer you regularly shop with can help you know all the money-saving opportunities you have available when cash feels tight.

Diversify your portfolio and find the right places to park your cash

Periods of higher inflation underscore the importance of making sure you’re earning a decent return on your cash, Benz says. Traditional brick-and-mortar banks rarely offer a yield higher than the rate of inflation. Meanwhile, those who opt for keeping their cash under their mattress risk losing even more purchasing power than usual.

Higher interest rates have benefited savers with the best yields in over a decade. Yields on all of Bankrate’s picks for the top high-yield savings accounts for February eclipse the current inflation rate of 3 percent. Compared with the national average savings yield of 0.47 percent, Americans who keep their cash in a nontraditional, Federal Deposit Insurance Corp. (FDIC)-insured online savings account are growing their purchasing power — all without any risk.

Meanwhile, fears of hotter inflation and widespread tariffs have made financial markets turbulent. The S&P 500, for example, is now back to where it was in early November, erasing almost all of the gains made in the key stock market index since Trump’s election.

Volatility in financial markets might make Americans feel wary of investing in the stock market. Over time, however, stocks are a proven way to grow your money faster than inflation and save for longer-term goals, Benz says. Downdrafts in the market can be a significant buying opportunity, whereas selling your assets and taking a more conservative investing strategy when markets are in the red could lead to substantial opportunity costs, she says.

Someone who stopped investing for three years starting at 25 would miss out on almost $200,000 in retirement savings by the time they were 70, had they been investing $2,400 a year into their account and they account earned an average 8 percent return a year at any other point, according to Bankrate’s calculations.

“If you’re someone who is still working and you have 20 years or more until retirement, the best hedge there for that portfolio against inflation is just to make sure you have ample exposure to stocks,” Benz says.

Once you make a plan, tune out the day-to-day volatility

Once you’ve taken the proper steps to safeguard your wallet from downside risks, next might come the hardest move of all: turn off the news and ignore the day-to-day volatility.

Americans don’t always make the best financial decisions when they’re swept up in paranoia. Back in 2023, for example, more than 1 in 4 investors (26 percent) reported that they had either sold or withheld investments because of elevated inflation, a Bankrate survey found. It came with a cost: The S&P 500 has soared more than 52 percent since January 2023.

For the most part, investors have been spoiled by soaring stock prices and a resilient economy. The S&P 500 has climbed about 16 percent in the past 12 months. Corrections, however, are inevitable. If Trump’s tariffs end up coming to fruition — or if economic growth starts to falter — financial markets could be even bumpier.

That shouldn’t matter to you, though, if you know you’re building up financial buffers, getting in the habit of paying yourself first and keeping a strong watch over your finances, according to Hamrick.

“For those with a truly long-term time horizon, they’ll likely be riding out multiple bull and bear markets and economic expansions and contractions,” Hamrick says. “There’s no predicting these things, which is why I’m generally a believer of ‘setting it and forgetting it’ when it comes to long-term investing.”

Bottom line

It’s one of the most commonly repeated phrases in personal finance: Focus on what you can control — not on what you can’t. To financial experts, Trump’s uncertain trade and tariff policies underscore exactly why.

The one throughline through all experts’ advice is preventing your emotions from guiding your financial decision-making. Let diversification, a long-term perspective and prudent financial habits do their job.

“We’ve had times of on and off tariffs before, and we have weathered that storm,” Zavarelli says. “If somebody is invested for the long term, this will really be a blip on the screen looking back. It doesn’t pay — and usually can hurt you — to overreact.”