The impact of President Trump’s tariffs on all imported products continues.
U.S. and global stocks are down as investors deal with the economic consequences of these new taxes. Groceries are expected to get more expensive. And U.S. consumer confidence is low.
So how should the average U.S. household respond?
Personal finance author and Washington Post columnist Michelle Singletary told Morning Edition‘s Steve Inskeep that she doesn’t advise people to go out and stock up on goods.
“You don’t want to tie that money up. You might actually need that money instead of for toothpaste, for more food on the table,” Singletary said.
Singletary added that the basic U.S. economy is sound, and that while current policies are causing the volatility, a reversal or any adjustments could lead to the market bouncing back. But until it does, she said, it’s a “very, very scary ride.”
Here are three things Singletary recommends as U.S. households and the market grapple with President Trump’s tariffs:
Go ahead and make that big purchase – IF you were already planning on it.Â
Singletary said she recommends moving forward with purchases that you were already budgeting for – especially if you have a fixed income and a good amount of savings.
“If you were in the market for a car, you were already shopping, [and] you have the funds for it, I would say definitely pull that trigger right now,” Singletary said, adding that some automakers are offering incentives in response to Trump’s tariffs.
Ford and Stellantis (owner of brands Jeep and Dodge) are now offering employee pricing in response to the president’s new taxes on imported cars. Nissan has also cut prices on some of its top-selling cars.
Otherwise, it’s time to save money – especially if you’re worried about job loss.
Don’t go out and buy a better camera, if you don’t really need it, Singletary said, adding that it’s especially true if you are worried the tariffs could affect your job.
“I would not do that because if you lose your job, that thousand dollars could go towards your rent,” Singletary said.
Employers added almost 230,000 jobs in March – a bit of reassuring news after President Trump’s tariffs roiled the markets last week.
Singletary warns, however, that an economic downturn and recession could happen fairly quickly and that you’ll want to preserve as much cash as possible.
“If you are already living paycheck to paycheck [and] your emergency fund is really low or nonexistent, please cut back now,” Singletary said. “Don’t wait to see the prices spike. Put that money away just in case you get hit by these tariffs.”
Don’t look at your retirement account portfolio.Â
Singletary recommends pulling out just the money that you need from your account and letting the rest sit.
Singletary said she hasn’t looked at her own retirement portfolio since Trump announced his plans to implement tariffs and the markets began to slide.
It may be difficult for retirees to look at their retirement accounts and not see losses, Singletary said, adding that she won’t tell people not to panic about their own money.
“You’ve worked hard for it and you need to feel what you need to feel,” Singletary said. “But please don’t act on those fears because, even in retirement, you could have another 20 or 30 years before you need to touch all of that money.”
The radio version of this story was produced by Milton Guevara and Chad Campbell and edited by Olivia Hampton.
Transcript:
STEVE INSKEEP, HOST:
Many Wall Street figures and billionaires supported President Trump’s election, and some seem unpersuaded by the president imposing tariffs on the world. Billionaire Bill Ackman is urging the president he supported to call a truce and avoid economic nuclear war. Elon Musk this morning posted a free trade tutorial by the economist Milton Friedman. One reason economists have raised their risk of recession is because tariffs are taxes that tend to raise prices. So what can the rest of us do about that? Michelle Singletary is a personal finance columnist at The Washington Post and also writes the biweekly column “The Color Of Money.” Michelle, welcome back.
MICHELLE SINGLETARY: Oh, thank you for having me.
INSKEEP: OK, first question – if people are anticipating higher prices, should they be rushing out to stock up on food or toothpaste or whatever?
SINGLETARY: I don’t think so. You don’t want to tie that money up. You might actually need that money, instead of for toothpaste, for more food on the table.
INSKEEP: Ooh.
SINGLETARY: If you were in the market for a car – you were already shopping, you have the funds for it – I would say definitely pull that trigger right now. There are some automakers that are giving incentives for people, so go ahead and make that purchase before that price actually spikes up.
INSKEEP: Oh, that’s interesting. And I suppose that would be true of a lot of consumer purchases, right? Like, if you’re thinking about buying a new phone, for example, phone prices may go up.
SINGLETARY: That’s exactly right. But if you were only in the market where you’re just like, oh, I kind of want a better camera, but you don’t really need it, I would not do that because if you lose your job, that $1,000 could go towards your rent.
INSKEEP: And – now, that’s an interesting point. Should people be thinking about losing their jobs? The employment market still seems strong, according to the latest figures.
SINGLETARY: It is still strong. But, you know, if there is a recession – and this could happen fairly quickly in terms of the downturn – you want to preserve as much cash as possible. So if you are in a good position – you’ve got money coming in and some sort of fixed income, and you’ve got a good savings – and you were going to buy something that you had already planned for, I would do that. But if you are already living paycheck to paycheck, your emergency fund is really low or nonexistent, I – please cut back now. Don’t wait for – to see the prices spike. Put that money away just in case you get hit by these tariffs.
INSKEEP: OK, so I’m thinking through your advice – don’t panic. Don’t rush out and buy stuff. If you were already going to buy something, get it done. Save some money. Let’s talk about something else here. People have retirement accounts. A lot of those accounts are invested in the stock market. They’ve been watching those numbers going down. What would you say for people to do there?
SINGLETARY: Stop watching the numbers. Don’t look at your portfolio. I haven’t looked at my retirement portfolio since Trump announced that he was going to do these tariffs, and the market started to slide. I can’t stomach looking at the actual numbers. I know that it’s down, but I don’t want to see the exact numbers because I’m not going to be touching that money for quite some time. And that’s my advice for people – just don’t look. If you are in retirement, it’s hard not to look if you’re pulling it out, but don’t – I’m not going to say don’t panic because this is your money. You’ve worked hard for it, and you need to feel what you need to feel. But please don’t act on those fears because even in retirement, you could have another 20 or 30 years before you need to touch all of that money. So pull out just what you need and let the rest sit.
INSKEEP: I just want to remember – the stock market crashed around the year 2000, came back. The stock market crashed in 2008, came back after a few years, so it does come back. But do you worry that something fundamental has changed in the world trading system here?
SINGLETARY: Yes. I do and don’t. The basic economy for the U.S. is sound. It is the policies that are tipping us into this direction. And those policies could change on a dime, which they have. And so if there is some resolution to it, then the markets will bounce back. But until it does, I understand that it’s a very, very scary ride.
INSKEEP: Washington Post personal finance columnist Michelle Singletary. Thanks for the insights.
SINGLETARY: Thank you.
(SOUNDBITE OF SIX ORGANS OF ADMITTANCE’S “SCHOOL OF THE FLOWER”)
