What can you do about U.S. tariffs affecting your finances?

A tax (or duty) that a government imposes on goods imported from other countries. Basically, it’s an extra charge added to foreign goods to make them more expensive.

Governments may impose tariffs to protect their own industries. Raising prices of imported goods may make local manufacturing comparatively cheaper. They’re also used to raise government revenue.

A country may choose to impose tariffs as retaliation.

Here’s an example of how a tariff could work:

Let’s say the U.S. government levies a 25% tariff on cars made in Canada.

Imagine that Canadian-made car is worth $40,000.

The tax would add an additional $10,000 to the sticker price: $40,000 x 25% = $10,000.

The total cost to an American car buyer would be $50,000: $40,000 + $10,000.

This makes it harder for Canadian car manufacturers to compete with U.S. car manufacturers.

In 2 main ways:

1. Higher prices. Companies importing tariffed goods often pass on part or all of the extra cost to consumers. A recent report suggests the tariff war could cause the overall inflation rate in Canada to rise from between a half a per cent to one per cent.
2. Economic fluctuations. Over time, tariffs might contribute to job losses and recessions.

It depends on how the situation evolves in the coming weeks and months. Market volatility is normal. Selling assets when they’ve lost some value creates the risk of locking in those losses. That could significantly impact the long-term value of your investments.