Takeaways
- Tariffs are taxes levied on imported goods and increase costs for consumers.
- Domestic companies pay tariffs on imported materials or goods.
- Tariffs increase the price of goods and materials, altering consumer behavior.
- Consumer behavior tends to shift to the less expensive, domestic alternative.
- Active shopping, discount scouting, coupon cutting, and creating a budget are all great ways to offset rising prices.
To save money in any economic cycle requires financial planning. It can be even more challenging when tariffs on your favorite goods and materials kick into gear. Let’s explore how tariffs work and ways you can prepare your wallet for price increases or market uncertainty.
What Is a Tariff?
A tariff is an economic tool governments use to control the flow of imports in and out of a country. Governments can impose tariffs on inbound goods, usually adding a fixed fee or an ad-valorem tariff. These tariffs allow the government to generate revenue on imported products and protect domestic goods and materials production. [1]
Fixed fee tariffs apply to a certain type of imported item, such as $1,000 per imported car. An ad-valorem tariff, however, is calculated based on a percentage of a particular good, say 10% of steel beams. Both types of tariffs increase the price of inbound goods for consumers but provide governments with an economic tool to control trade.
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5 Steps to Manage Tariffs
Tariffs have a significant impact on personal finances and consumer behavior. Here are five ways you can manage tariffs increasing the prices of your favorite items.
1. Review Your Budget
Having a budget in place is critical during economic turbulence. Whether you need to create a budget for the first time or review your current spending patterns, getting a pulse on your monthly cash flow is essential to success.
You can use many types of budgets, but the best option is to have a budgeting system you feel comfortable with. This increases budgeting adherence. Pick a system like the 50/30/20 budget to give you exact guideposts for how much to spend, save, or invest each month.
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The 50/30/20 Budget
2. Compare Prices and Shop Discounts
Being price-insensitive to goods you love can reach a breaking point with newly added tariffs. In fact, they might be the catalyst you need to start shopping around for the next best alternative.
Explore upcoming sales and compare products among retailers to get the best deal available. Depending on your shopping, you could also explore resale websites to get better deals.
Read More: 10 Easy Steps to Create a Meal Plan and Save Money
3. Shop Value Over Brand Recognition
Brand loyalty is one of the most valuable intangible assets companies can foster. As a consumer, you might be super brand loyal, especially to the best products on the market. But during periods of rising prices, it might be time to turn to another provider.
To save money, you should shop for value over brand recognition. This can be particularly helpful when you are about to make a large purchase, like buying your first car.
Read Also: 5 Amazing Savings Habits to Start Now
4. Use a Budgeting App
Tracking your expenses is one thing, but getting access to the best budgeting apps is another. If you aren’t using a budgeting app now, consider downloading one today to get your finances in order.
These mobile apps can be the perfect financial tool for sending helpful spending reminders, congratulatory texts for meeting saving goals, or information about the market. Budgeting apps can also give you real-time insights into product increases and even suggest where to cut spending.
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5. Cut Out Unnecessary Spending
Let’s imagine a scenario where there are tariffs applied to one of your favorite products. Regrettably, you might need to switch to a less expensive domestic brand or offset the increase in price by cutting something out of your monthly budget.
It can be challenging to prioritize what to eliminate from your spending. If you already follow the passion budget, you have already aligned your spending with what makes you happy.
Sometimes, starting a No-Spending Challenge is the best way to adjust your budget and begin new spending patterns.
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Ways to Offset Rising Costs
- Start a Side Hustle: Whether you are battling inflation or tariffs on your favorite goods, you can always increase your income to offset these costs. Read more about 10 Popular Freelance Jobs.
- Get a Promotion: One of your greatest assets is your ability to produce an income. If you are on the verge of earning a promotion with a corresponding increase in pay, now could be the perfect time to double down. Read more about how to advance your career.
- Use Cash Back Credit Cards: While you don’t have direct control over the prices of goods you shop for, you can leverage the best credit cards to help you secure great deals. Cash back credit cards can provide the discount you need to offset increasing prices.
- Shore Up Your Slush Fund: Rising prices are usually part of an economic cycle or temporary jabs as part of a “trade war.” Having a financial cushion will always make you feel better and allow you to blunt the pain of changing consumer prices. Your slush fund will give you the breathing room to navigate a changing economy.
Smart Summary
Tariffs are fees levied on imports that increase the cost of everyday goods and services. Governments use tariffs to raise revenues and protect domestic industries. As a consumer, you might feel the rising price of goods as tariffs are applied to your favorite products. However, you can take steps to shield yourself and save money while you shop.
Smart Money requires our expert writers to rely on trusted primary sources—academic research, government reports, expert interviews, original reporting, and peer-reviewed data—to deliver precise and up-to-date content. All of our content is thoroughly fact-checked. We also incorporate relevant research from reputable publishers when it aligns with our editorial focus. For a closer look at our rigorous journalistic standards, explore our editorial guidelines.
(1) Tax Foundation. Tariff. Last Accessed March 17, 2025.
