PUBLISHED MAY 5, 2019

How Tariffs Can Affect Your Wallet

In case you missed it, the US has been fighting with other countries about trade policies for a while. The bargaining chip of choice: tariffs. That’s a special tax on foreign imports that makes them cost more. Think of it as a monetary punishment for countries that aren’t getting along. (The idea is that if a country’s exports cost more, consumers won’t buy as much. Then that country loses money.)


Who’s not on President Donald Trump’s nice list lately: China and Mexico. He’s slapped tariffs on billions of dollars of Chinese imports since last summer. China's pres has retaliated. It hasn't been pretty. In late May, Trump announced a new 5% tariff on ALL Mexican imports...and said more could be on the way. Here’s what all this means for your wallet.


You’ll pay more for big-ticket and everyday items. Many companies eventually pass on their higher cost of goods to customers. Meaning you’re paying more, too. Things that are already more expensive because of existing tariffs: washers and dryers, home renos, and soda. Several big businesses — like Gap, Costco, and General Motors — have all said they’ll probably raise prices.


The stock market might be extra bumpy. Trade drama doesn’t usually sit well with investors. Last year, the Dow Jones (an index of 30 big US companies many people use to benchmark overall market performance) had some pretty rough days in response to trade news. So buckle up. On the bright side, the market’s recovered from every major drop in history. Then continued to go up. If you’re investing for the long term, stay cool and try to block out what happens in the short term.


theSkimm: One estimate says tariffs could cost the avg American family about $800 more per year. That can go up as new rounds of tariffs go through. There’s not much you can do to control that...aside from comparison-shopping and adjusting your monthly budget to make up the difference. Not fun. But smart.


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