Trump Tariffs: Here Are 4 Smart Things to Do With Your Money Right Now

Motley Fool04-03

KEY POINTS

New tariffs could drive up prices on everyday goods, making it essential to prepare your finances now.
Strengthening your emergency fund and paying off debt can help you stay ahead of rising costs.
Investing wisely and locking in big purchases before prices rise can protect your long-term financial health.

New tariffs are coming, and they could have a big impact on your wallet. President Donald Trump has announced a baseline 10% tariff on all imports, with even higher rates on the E.U., China, India, and other countries. That means prices on everything from electronics to groceries could climb fast.

No one knows exactly how this will shake out, but one thing is certain: Now is the time to get your finances in order. If tariffs lead to rising costs, a little planning today could save you a lot of stress down the road.

Here are four smart moves to protect your finances and stay ahead of potential price hikes.

1. Beef up your emergency fund

A tariff-induced inflation spike would mean higher costs for essentials. If you're already feeling stretched, now is the time to bulk up your emergency fund. Most experts recommend having three to six months' worth of expenses saved, but if tariffs drive up costs, having extra savings could be a lifesaver.

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2. Pay off high-interest debt

If tariffs push prices higher, the Federal Reserve might respond by raising interest rates again. That means credit card debt, personal loans, and other variable-rate debt could get even more expensive.

Now's the time to knock out high-interest debt. Consider a balance transfer credit card or a personal loan with a lower fixed rate to consolidate what you owe. The less debt you carry, the better.

3. Invest wisely

Trade wars and tariffs can shake up the stock market.

Instead of making drastic moves, consider diversifying your investments. Index funds and ETFs that track the broad market can help you weather volatility. And if you want to lock in a guaranteed return, don't forget about certificates of deposit (CDs).

CDs offer a guaranteed return, but in exchange you can't access your savings until your term is up -- typically somewhere between a few months and five years. The best CDs currently offer rates above 4.00%, and they'll get even more attractive if tariffs cause rates to go up.

4. Lock in big purchases now

If you've been considering a major purchase -- like a new car, home appliances, or even home renovations -- think about making it sooner rather than later. Tariffs could drive up costs on imported materials, making big-ticket items more expensive.

Of course, don't rush into a purchase just for the sake of it. But if you were already planning to buy, locking in today's prices might save you money in the long run.

Don't panic

Tariffs or not, smart money habits never go out of style. Strengthening your emergency fund, tackling debt, making wise investments, and pulling the trigger on big purchases before prices rise can help you navigate any economic uncertainty ahead.

If you're looking for a high-yield savings account, a low-interest balance transfer card, or investment guidance, now's the time to explore your options. Small steps today can help you stay financially strong no matter what the future holds.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.