Learn About Tariff Basics, Future Price Rises and Tariff Prep
Tariffs have been all over the news recently. But how will tariffs affect the economy, and does the typical American consumer have anything to worry about? While some questions can’t be answered now, understanding the facts can help you make smart choices as the country’s economic landscape changes.
What are Tariffs, and Why Could They Impact the Average Consumer?
Tariffs are taxes charged by a government on imported goods and services. Tariffs can be narrowly or broadly applied — a government may charge a tariff on something specific, like lumber from Canada, or universally, as the White House announced on April 2, 2025.
Although tariff policies are still in flux, the White House has stated its interest in imposing taxes on imports to bolster domestic manufacturing and correct perceived trade imbalances. But critics have pointed out that, in a globalized economy, the downstream impacts of tariffs could upend the availability and affordability of common products and services in the United States.
Tariff vs. Tax: What’s the Difference?
Tariffs are taxes, but not all taxes are tariffs. Tariffs are a tax paid by importers to a government on goods and services produced in a different country. Universal tariffs tax all imports — whether raw materials, manufactured parts or complete products.
Will Tariffs Raise Prices?
As Beyond Finance found in a recent survey, most Americans don’t feel confident about managing their finances during periods of economic uncertainty. And considering that 2025’s tariffs will reach an average rate not seen since 1934, keeping an eye on economic shifts is more important than ever for financial wellbeing.
Currently, a 10% tariff is in place for all imports to the United States, with expected reciprocal tariffs to begin on July 9, 2025. That means there is a strong possibility that many common imported goods will experience price rises in the near future, including basics like:
- Foods like coffee, chocolate, fruits, vegetables, prepared goods and more
- Prescription drugs
- Electronics
- Textiles
Some critical elements of manufacturing have been set apart for specialized tariffs. For example, aluminum, steel and tech components will all experience reprieve from the tariffs announced April 2. However, price rises may still come for these goods, depending how long reduced tariffs hold.
Keep in mind that individual parts of a product assembled in the United States might come from beyond its borders. These pieces could impact the overall price and availability of a domestically-produced product.
Who Pays for Tariffs?
Tariffs are outward-facing taxes. The importer must pay to sell their product in their target country. Let’s say an American produce market buys watermelons from Mexico at $5 per melon. With a 10% tariff, the produce company pays an additional $.50 per melon. The market may either eat the cost of the tariff or sell the fruit at a higher price to cover it. Often, producers will raise prices to pay for the cost of the tariff, leaving consumers to foot the bill.
Economists aren’t sure what the real impact of tariffs on American consumers will be. Some analysts predict tariffs will cost US households anywhere between $1,200 – $5,200 annually.
How Can Consumers Prepare for Tariffs?
With much uncertainty around the government’s policies, “caution” is the watchword of the moment. But what does that practically mean for most people?
1. Don’t Panic Buy
It might be tempting to stock up on a years’ worth of rice in a weekend. But deny the urge to make a list of things to buy before tariffs begin. Panic buying is an emotional reaction to uncertainty: Instead, funnel your anxieties into the work of stabilizing your finances.
2. Focus on Your Emergency Fund First
One of the best financial decisions anyone can make is building an emergency fund. Where you can, cut non-essential spending and channel that money into a savings account. Ideally, you’ll feed this account until you’ve reached a balance that can cover 3-6 months of your basic living expenses.
3. Take a Conservative Approach to Your Finances
If you tend to overspend or have outstanding debts, now is the time to sit down and figure out a plan. Open a high-yield savings account, make sure your budget makes sense for your income and evaluate where you stand with your debts (and how you could save on them).
It’s natural to worry about the effects of tariffs on the stock market and your 401(k). Consult with your advisor about shifting them into less volatile holdings for the time being — earning less is better than losing money, after all.
4. Evaluate What You Own
Is your car is on its last legs, or your cell phone unable hold a charge for more than a few hours? Then you should consider investing in a replacement sooner rather than later. Electronics and vehicles are complicated technologies that utilize elements from all over the world. In the event that robust tariffs remain in place, it might be worth avoiding paying more later than you would currently. As always, do your research and approach major purchases thoughtfully.
5. Consume Less as a Habit
If you feel your lifestyle will be impacted by a premium on imported goods, reflect on where you can cut or redirect your spending. Re-use items you already have at home, shop for used goods first and get creative with your groceries. Investing in your personal self-sufficiency will always pay off.
6. Read the Terms of Purchase Carefully
Need to purchase something from another country? Then be sure to read the producer’s terms and conditions. Prices listed online may not include the tariff cost, and you may be hit with an unexpected bill after your purchase.
What are the Pros of Tariffs?
Tariffs have two primary benefits: Increased tax revenue and recaptured consumer demand for domestically-made products. Tariff proponents assert that these taxes will help pay down government debt and may prompt a resurgence in local manufacturing with local workforces. However, the types of goods impacted by tariffs — coupled with the feasibility of producing some of those products stateside — may temper a boom in domestic industry.
It’s hard to know what the positive impacts of tariffs might be. However, by looking at how small businesses, consumers and corporate entities have reacted to recent trade policy, we know one thing for certain: Big changes could be coming — but there are still many ways for normal people to control their finances.