US Tariffs: How Will It Affect My Personal Finances?

US tariffs are currently a dominant topic in the news. The American government is imposing tariffs on goods it imports from many of its trading partners, including Canada. These tariffs will undoubtedly impact the economy and, in turn, your finances. However, you can confidently navigate this trade war by clearly understanding what tariffs are, their purpose, and how they can affect you.

Tariffs

Essentially, tariffs are taxes. Governments apply tariffs to goods they import. Tariffs can apply to finished goods, such as computers, or commodities like oil and food. The purpose of tariffs is to prevent other countries from flooding your market with cheaper goods. Buying imports instead of domestic products can hurt a country’s economy.

Some reasons imports from other countries may be cheaper are:

• Lower labour costs.
• Less expensive materials.
• The importing country has a stronger currency.

One effect of tariffs is to remove the price advantage of imports.

The economic effect of US tariffs

The economic uncertainty we’re currently experiencing is the result of politics. Governments are attempting to protect their economies and jobs. This uncertainty can lead to fluctuations in the stock market, changes in consumer confidence, and potential job losses, which can directly impact your financial stability.

Tariffs are concerning to businesses and individuals because of their impact. Some typical results of tariffs are:

• Higher prices – Tariffs are a tax applied to imports, which are then passed on to buyers.
• Reduced demand- Businesses and consumers buy less because of higher prices.
• Supply chain disruptions: Supply chains must adjust to lower demand and new rules.
• Job loss: Businesses lay off workers due to shrinking profits.

Other possible outcomes include reduced manufacturing and loss of government revenue. Many Canadian provinces heavily depend on US trade. Alberta’s economy is one example. The US is Alberta’s largest trading partner, accounting for 88.7% of its exports of foreign merchandise with a value of  $161.6 billion in 2024. US tariffs could have a significant impact on Alberta’s economy.

New Brunswick is another province that relies on US trade, with 65% of all its exports going to the US. Main exports from New Brunswick are wood, paper, mineral fuels, fish, crustaceans, and computers. Trade between the province and the US accounted for $19 billion.

How tariffs can impact your finances

Tariffs can directly affect your finances through price increases and job losses. Higher prices will put more strain on your budget. You may need to cut back on purchases, go without things you need, or go into debt to buy necessities.

Tariffs are applied to businesses, but they can affect you because businesses are producers and employers. They’ll pass the higher costs they face onto the consumer, resulting in inflation.

If they need to scale back their operations, workers can experience layoffs. Layoffs can be temporary or permanent. The possibility of losing your job will increase your sense of financial insecurity.

Losing your job is devastating. It may take some time to find a new one. Debts can pile up, putting more pressure on your budget.

Dealing with financial stress

Canadians are facing three leading causes of financial stress. These are:

1. The high cost of living.
2. Job insecurity.
3. Too much debt.

Thankfully, there are steps you can take to reduce the impact of these stressors and regain control of your financial situation.

Cost of living

Prices are still increasing and may get worse due to tariffs. You may need to borrow to cover living expenses due to higher costs for food, housing, and transportation.

Creating a budget will show you how much household income you have to work with and where your money is going. There are many online calculators to help with this. Include all sources of income in your budget and all expenses, including debt repayment.

If your expenses and debt repayment don’t exceed your income, you can take the next step and set up an emergency fund. Having money in savings to pay for unexpected expenses will ensure you don’t have to rely on debt to cover emergencies.

Your budget might show you that your expenses exceed your income. You may be able to get your budget back in balance by:

• Cutting unnecessary expenses like subscriptions or memberships you don’t use.
• Stocking up on essential items before prices rise.
• Reducing costs by negotiating better rates for insurance or phone plans.
• Comparison shopping.
• Finding ways to increase income, such as a side hustle or selling items you don’t need.

Job insecurity

The possibility of losing your job is scary. Layoffs are possible if US tariffs cause an economic slowdown or recession. Additionally, finding a new one could be challenging if employers aren’t hiring.

So, what can you do? Budgeting, balancing your income and spending, and setting up an emergency fund are effective first steps.

Your employer might keep you updated on the possibility of layoffs, or they may not. Some ways to prepare yourself are:

• Upgrade your skills by taking extra training through available programs.
• Research your rights to find out if you are entitled to severance pay and how much.
• Check what government benefits you would qualify for, like Employment Insurance.
• Research your local job market and network with people in your industry.

Too much debt

Your budget will show you if your debt payments are manageable. If they’re taking a serious bite out of your income, dealing with it now will help you if the economy worsens.

Making extra payments on your debt can help reduce or eliminate it, freeing up funds to put elsewhere. It will also save you money on interest costs. Online loan calculators will show you the impact of extra payments on your debt or how much you need to pay to be debt-free by a specific date.

Remember that debt relief options are available if you find that your household debt is more than you can manage. Licensed Insolvency Trustees are debt experts certified by the federal government. They offer government-approved debt solutions for borrowers who are carrying too much debt. The first meeting is free and allows your LIT to determine the best way to help you, providing the support and guidance you need to make informed financial decisions.

LITS will work with individuals and businesses who need debt relief. Consumer Proposals and Bankruptcy are two solutions to consider if you are struggling with high debt.

Consumer Proposal

A Consumer Proposal can reduce your debt by up to 80%. You have up to five years to repay the remaining debt through monthly payments. The advantages of a Consumer Proposal are:

• Affordable payments.
• You repay some of your debt.
• All collection and legal actions stop.
• Your payment includes your fees.
• You keep your assets.
• They’re available for businesses as Division 1 Proposals.

The disadvantages are:

• You have payments to make, which may not be affordable.
• Becoming debt-free could take up to five years.
• It will affect your credit rating.

If your debt problems are severe, filing for Bankruptcy will eliminate your debt.

Filing for Bankruptcy

When there’s no way you can repay your debt or you’ve exhausted all other options, filing for personal Bankruptcy will eliminate what you owe. Many individuals turn to bankruptcy, as it will begin the journey to being debt-free to start over.  The advantages of filing for Bankruptcy are:

• You’ll be debt-free in as little as nine or 21 months, depending on your situation.
• All collection and legal actions stop.
• Your province or territory allows you to keep some of your assets.
• You’ll no longer have payments, so you can focus on rebuilding your finances.
• Companies can file for business Bankruptcy.

Disadvantages:

• You must report your income to your LIT every month.
• You can lose some of your assets.
• It will damage your credit rating.

Where to Get Help With Your Debt

There is no doubt that US tariffs will affect Canadians financially, both on a personal level and business level.  It is just unknown how much.  Contact Allan Marshall and Associates for a free consultation if you’re already having difficulty. Our Licensed Insolvency Trustees have been helping people and businesses eliminate their debt problems for over 40 years. Book an appointment online or call us at 1-888-371-8900. We’ll work with you to put your debt behind you.