
Andrew Harnik / Getty Images
TAKEAWAYS KEY
- For much of President Donald Trump's first 100 days, his economic agenda has been focused on tariffs.
- Prices of large-ticket items such as cars and homes as well as smaller electronic appliances and toys are expected to rise.
- The Federal Reserve has not cut interest rates as it is waiting to see how tariffs will affect the economy.
During the 100 days of President Donald Trump’s first term, many of his actions centered on tariffs which could have an impact on your budget.
Trump said his main goal with tariffs is to bring manufacturing jobs back to the U.S. He acknowledged, however, that his tariffs would cause ‘a little disruption’.
Some business leaders claim they plan to pass along the costs of new import taxes to consumers. The Federal Reserve is waiting to see what effect tariffs will have on the economy before deciding how much it will charge for borrowing.
The cost of big-ticket items is going to increase
Tariffs are expected to increase the costs of the major portions of your budget.
Trump’s tariffs on all imported vehicles are expected to increase the price of buying and maintaining cars. Even with the recent softening of auto tariffs, it is estimated that they will add more than $5,000 to non-luxury car prices, according to a new analysis by Jerry, a comparison app for car insurance. The number is even higher if you include luxury vehicles. Luxury cars are estimated to cost $21,000 more after tariffs.
Similarly, the cost of building and repairing houses and renting homes will likely rise due to various tariffs applied to imported lumber, stone, copper, and appliances.
In turn, car and home insurance costs are expected to increase, as tariffs likely mean increased claims costs—expenses that insurers will eventually recoup from consumers.
Other Costs are Also Likely To Increase
It's not just big-ticket items that will get more expensive.
Prices of small electronics, such as phones, toasters, and batteries, are expected to rise. That’s because many of those items are made in China, the U.S.’s trading partner with the highest tariffs.
For the same reasons, it is expected that prices of larger appliances like refrigerators, hot water heaters and clothing will also increase. Other smaller products, such as beauty and skin products, plastic items, toys, and clothing, are expected to become more expensive.
You can expect to get a tariff break on your grocery bill.
While the majority of fresh fruit and vegetables are imported in the U.S., most are imported from Canada or Mexico. Your food is exempted from the 25% tariffs on neighboring countries as it falls under the USMCA Trade Agreement.
Interest Rates Are Still High
The Federal Reserve has held its influential federal funds rate steady so far this year, as it waits to see what Trump’s on-again, off-again tariffs will do to the economy.
That's important because it can affect your borrowing costs on all kinds of loans, including credit cards, auto notes and personal loans.
Fed officials have said that they may cut rates as early as June if signs of an economic slowdown are seen. The Fed must strike a balance between keeping inflation low and maintaining high employment. Economists say Trump’s tariffs could increase both inflation and unemployment, meaning the central bank will have to decide which problem to tackle first.