If you’re worried about how the Trump administration’s tariff policy might affect your finances, you’re not alone. Tariffs are now the top concern among consumers, according to The Conference Board’s monthly Consumer Confidence Survey, published on April 29.
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You can’t control trade policy or its effects on the economy, but you can prepare your finances for whatever might come. In a recent episode of the “Legacy Investing Show” on YouTube, host Preston Seo shared five tips for protecting your money against price increases due to tariffs.
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Budget for Inflation Before Prices Increase
“Planning early does not just help you save; it gives you more options,” Seo said.
Your cash will lose purchasing power if tariffs cause inflation. So rather than sock cash away in a bank account, Seo recommended banking just 40% of it for basic expenses and 10% for extras. The other 50% should go toward investments that keep your money working for you.
Investing during uncertain economic times can be scary, but it can pay off in a big way.
A Fidelity analysis of Bloomberg Finance and National Bureau of Economic Research data showed that historically, investors who began buying stocks during recessions saw larger gains than those who started investing during non-recessionary periods. After one year, the recession investors saw 19% returns compared with 11.7% for non-recession investors, based on the S&P 500. The gap narrowed as time passed, but recession investors retained a 2-percentage-point advantage, on average, even 10 years later.
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Make Upcoming Large Purchases Now
Think about large expenses you might incur over the next few months and plan to make them sooner rather than later.
“Once tariffs ripple through the supply chain, prices begin to rise. Businesses rarely reduce prices once they’ve increased them,” Seo said.
He used a $1,500 air conditioner as an example of a purchase you might push up. If the unit is made with imported aluminum or copper components, the price could increase 10% to 20% by July, Seo said, adding $150 to $300 to your cost.
Buy Bitcoin
Seo called bitcoin a “hedge against uncertainty.”
“When the economy becomes unstable, whether due to interest rate changes, inflation or global tensions like tariffs, investors look for alternative stores of value. And that’s why gold and bitcoin both see increased demand,” he said.
Or they did, until recently. Gold is up nearly 30% after steady gains since the beginning of the year, while bitcoin is up just over 3% — and only after a recent rally following a decline between January and early April.
That said, Seo said he makes small but consistent bitcoin purchases and holds on to it regardless of any short-term price swings. That patience is key. While highly volatile in the short term, bitcoin has seen strong long-term gains.
Diversify Your Investment Portfolio With Foreign Equities
Seo noted that when external forces like tariffs strain profit margins of U.S. companies, domestic stock holdings can suffer. Diversifying into international equities mitigates that risk.
Seo said he owns three international exchange-traded funds, covering different aspects of the global markets:
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX), for broad international exposure
Fidelity International Index Fund (FSPSX), for exposure to developed markets
iShares Core MSCI Emerging Markets ETF (IEMG), for exposure to emerging markets.
Invest In Companies That Could Benefit From Tariffs
Every economic challenge produces winners when it comes to the stock market. Tariffs are no different. Seo recommended taking a lesson from institutional investors by watching sectors and industries that stand to benefit. Here are a few examples:
Manufacturing: Look for companies that can shift quickly from foreign imports to U.S. production.
Defense: International tensions could increase government spending on defense, plus these stocks are less vulnerable to market volatility.
Domestic energy: If tariffs disrupt supply chains, the U.S. will become more reliant on its own fuels and energy infrastructure.
Final Thoughts on Protecting Your Money From the Effects of Tariffs
Seo recommended that you revisit your budget periodically and invest intentionally to align yourself with government policies.
“At the end of the day, this isn’t about just saving money. It’s about protecting your future, your family and also the freedom that you’ve been working so hard to build,” he said.
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Sources
The Conference Board, “US Consumer Confidence Plunged Again in April.”
Legacy Investing Show, “How to Protect Your Money When Prices Go Up (New Tariff Breakdown).”
Fidelity, “3 things you should know about recessions.”
This article originally appeared on GOBankingRates.com: 5 Ways To Protect Your Money Amid Tariffs and High Costs, According to Preston Seo
