What Do Tariffs Mean For Your Bank Account

It’s official, the increased tariffs are now in effect.

It is expected that this will impact the average American household by $830 to $1,200 annually.

Not to mention Mexico, Canada and China are expected to issue tariffs right back at us.

On the one hand, you can speculate on the benefits that might come out of this. On the other hand, you can complain about the consequences that will come from this.

Regardless, I don’t see any short-term good coming out of this move and wanted to share my thoughts on the topic.

And while I’d love to stop paying income tax, I don’t think the tariffs will ever lead to a situation where that happens. For reference, tariffs bring in about $80bn - Americans pay $2.7 trillion in income tax.

Lastly, just to clarify, this isn’t an email about Trump or the Republican Party. You may read this and hate Trump, this isn’t an email bashing him in the slightest. And you may read this and support Trump, but that doesn’t mean that every policy is the right thing to do.

In both cases, we should always look at facts and determine if something is good instead of looking at where the idea came from or listening to what the media tells us to think.

Things to know about Tariffs

A tariff is a tax imposed by a government on imported goods and services.

The tax is used to try and protect domestic industries, generate revenue and influence trade policies.

A tariff causes the imported good to increase in price making it less attractive than a domestically (U.S Made) produced good.

Starting in Feb there are tariffs places on three of our largest trading partners: Canada (25%), Mexico (25%), and China (10%). Canadian energy products are taxed at 10%.

Proponents argue that these taxes will protect American industries.

Critics warn of increased consumer prices.

Time will tell. At this time anyone’s thoughts are speculation including mine.

What to do when things get expensive

Whenever the economy changes or someone changes a policy that might not benefit you financially you really have two options.

Complain and keep doing what you’re doing today knowing that life is going to be harder.

Figure out how to adapt to the situation. I’m not saying it’s ideal, but that’s really the only option. Neither you nor I are going to be the people that stop this from happening.

When it comes to adapting here are some of the strategies I’m thinking:

• Make a budget: keeping track of your spending changes is going to make sure that you don’t fall behind on your goals. It’s hard to say when price changes will take effect, but if they do, you don’t want the increases to slip through the crack. $1,200 might be the difference between you paying off your debt this year or adding to it.

• Buy secondhand: This is a great way to avoid tariffs altogether. If you have certain items you need to buy like furniture, clothing, artwork, etc consider shopping second-hand. My wife and I have been doing this for years and not only do you avoid tariffs, but it’s much cheaper.

• Buy American-made: Not only does it feel good to support American-made brands, but you’re less likely to be impacted by the tariffs in doing so.