The Apple Fifth Avenue store in New York, U.S., on Monday, Feb. 24, 2025.
Michael Nagle | Bloomberg | Getty Images
Even as a pause on reciprocal tariffs has been put into effect, consumers are already anticipating the pressures of higher prices.
A majority of Americans — 85% — have concerns about the tariffs, according to a new Banking Herald survey of more than 2,000 individuals conducted this month.
Among top concerns of consumers is that the new policies will impact their ability to afford necessities and that the U.S. economy will fall into a recession.
Meanwhile, cracks in consumer confidence are showing elsewhere.
The University of Michigan’s consumer survey shows sentiment has dropped by more than 30% since December among persistent worries of a trade war. The latest reading for April fell 11% from the previous month, which was worse than expected.
The worries are not unfounded, experts say. Tariffs could cost the average household $3,800 per year, the Budget Lab at Yale University estimates.
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“Most Americans are worried about tariffs, and it’s actually impacting their spending plans,” said Kimberly Palmer, personal finance expert at Banking Herald.
In the next 12 months, a significant portion of individuals surveyed by Banking Herald plan to make changes to their spending habits, with a notable shift towards saving more.
Specifically, 45% plan to spend less on non-necessities, 33% intend to spend less on necessities, and 30% plan to save more money in an emergency fund. However, a smaller percentage, 14%, anticipate paying less on their debts.
The tariffs come as consumers were already struggling to pay for groceries and other essentials amid higher prices, according to Palmer.
“These tariffs are adding to that financial stress and basically forcing people to make some difficult decisions,” Palmer said. That includes scaling back on travel and planned big-ticket purchases like a car.
Emergency savings is ‘most important’ priority: expert
New economic pressures may prompt income to be eaten up by rising prices and competing interests, according to Stephen Kates, a certified financial planner and financial analyst at Bankrate.
Consumers may have to make tough choices between saving, investing and paying down debts.
“If you have nothing [saved], start with the emergency fund,” Kates said.
Individuals should strive to have at least one month of essential expenses set aside at the very minimum, Kates said. Ideally, that would be more like three to six months’ living expenses, he said.
That way, if a job or other income loss happens, consumers can protect themselves from going into debt, Kates said.
For individuals who already have racked up debt balances, prioritizing emergency savings still makes the most sense, Kates said. And if you’re choosing between emergency savings or saving for retirement, emergency savings should still be the highest priority, he said.
To be sure, that doesn’t necessarily mean individuals should ignore their other goals.
Kates discussed using what is called the “debt avalanche” strategy.
The focus is on paying down the debt with the highest interest rate first — while paying minimums on the others — then move on to the account with the next highest rate, and so on. That can provide an immediate return and help free up money in household budgets, Kates said.
When it comes to retirement savings, it’s important to make sure individuals are contributing enough to take advantage of a match, if their employer offers one, he said.