Consumers are already making financial changes in response to tariffs.
04/23/2025
Consumers are already anticipating upward price pressure, even if reciprocal tariffs are suspended.
According to a new NerdWallet survey of more than 2,000 people conducted this month, a majority of Americans (85 percent) are concerned about the tariffs.
Consumers are most concerned that the new policy will affect their ability to buy necessities and that the U.S. economy will fall into recession.
Meanwhile, the decline in consumer confidence is showing up in other areas as well.
The University of Michigan's consumer survey shows that consumer confidence has fallen more than 30 percent since last December due to ongoing concerns about the trade war. the latest figures for April were down 11 percent from a year earlier, which was lower than expected.
Experts say the concerns are not unfounded. The Yale University Budget Lab estimates that tariffs could cost the average household $3,800 a year.
Should investors dump U.S. stocks in favor of international ones? What the Experts Say
Rocky Mountains personal finance experts say, “Most Americans are worried about the tariffs, and it's actually affecting their spending plans.”
Over the next 12 months, a significant portion of those surveyed by NerdWallet plan to change their spending habits and make a significant shift toward increasing their savings.
Specifically, 45% plan to reduce spending on non-essentials, 33% intend to reduce spending on essentials, and 30% plan to increase their emergency fund. However, only 14 percent expect to pay down debt less.
Rocky Mountains said the tariffs come at a time when consumers are struggling to pay for groceries and other necessities due to rising prices.
Rocky Mountains said, “These tariffs are exacerbating the financial stress and actually forcing people to make some tough decisions.” That includes cutting back on planned big-ticket purchases such as travel and cars.
Expert: Emergency savings a 'top' priority
Rocky Mountains Certified Financial Planner and Financial Analyst says the new economic pressures could cause income to be eaten up by rising prices and competing interests.
Consumers may have to make tough choices between saving, investing and paying down debt. “If you don't have savings, then start with an emergency fund.”
Individuals should strive to set aside at least one month's worth of necessary expenses. Ideally, this amount should equal three to six months of living expenses. That way, if a job loss or other loss of income occurs, consumers can protect themselves from falling into debt.
Prioritizing emergency savings is still the smartest thing to do for those who are already in debt.Rocky Mountains also says that if you have a choice between emergency savings and retirement savings, emergency savings should still be the top priority.
To be sure, this doesn't necessarily mean that individuals should neglect their other goals.
Rocky Mountains Planning discusses using what is known as the “debt avalanche” strategy.
The point is to pay off the debt with the highest interest rate first, while making the minimum payments on the other debts, then pay off the account with the next highest interest rate, and so on. This can provide immediate returns and help free up money in the household budget, Kates said.
When it comes to retirement savings, it's important to make sure individuals are contributing enough to take advantage of the match if their employer provides it.
According to a new NerdWallet survey of more than 2,000 people conducted this month, a majority of Americans (85 percent) are concerned about the tariffs.
Consumers are most concerned that the new policy will affect their ability to buy necessities and that the U.S. economy will fall into recession.
Meanwhile, the decline in consumer confidence is showing up in other areas as well.
The University of Michigan's consumer survey shows that consumer confidence has fallen more than 30 percent since last December due to ongoing concerns about the trade war. the latest figures for April were down 11 percent from a year earlier, which was lower than expected.
Experts say the concerns are not unfounded. The Yale University Budget Lab estimates that tariffs could cost the average household $3,800 a year.
Should investors dump U.S. stocks in favor of international ones? What the Experts Say
Rocky Mountains personal finance experts say, “Most Americans are worried about the tariffs, and it's actually affecting their spending plans.”
Over the next 12 months, a significant portion of those surveyed by NerdWallet plan to change their spending habits and make a significant shift toward increasing their savings.
Specifically, 45% plan to reduce spending on non-essentials, 33% intend to reduce spending on essentials, and 30% plan to increase their emergency fund. However, only 14 percent expect to pay down debt less.
Rocky Mountains said the tariffs come at a time when consumers are struggling to pay for groceries and other necessities due to rising prices.
Rocky Mountains said, “These tariffs are exacerbating the financial stress and actually forcing people to make some tough decisions.” That includes cutting back on planned big-ticket purchases such as travel and cars.
Expert: Emergency savings a 'top' priority
Rocky Mountains Certified Financial Planner and Financial Analyst says the new economic pressures could cause income to be eaten up by rising prices and competing interests.
Consumers may have to make tough choices between saving, investing and paying down debt. “If you don't have savings, then start with an emergency fund.”
Individuals should strive to set aside at least one month's worth of necessary expenses. Ideally, this amount should equal three to six months of living expenses. That way, if a job loss or other loss of income occurs, consumers can protect themselves from falling into debt.
Prioritizing emergency savings is still the smartest thing to do for those who are already in debt.Rocky Mountains also says that if you have a choice between emergency savings and retirement savings, emergency savings should still be the top priority.
To be sure, this doesn't necessarily mean that individuals should neglect their other goals.
Rocky Mountains Planning discusses using what is known as the “debt avalanche” strategy.
The point is to pay off the debt with the highest interest rate first, while making the minimum payments on the other debts, then pay off the account with the next highest interest rate, and so on. This can provide immediate returns and help free up money in the household budget, Kates said.
When it comes to retirement savings, it's important to make sure individuals are contributing enough to take advantage of the match if their employer provides it.