Trade wars and tariffs always spark heated debates, and the latest round of proposed tariffs from former President Donald Trump is no exception. With discussions surrounding increased costs on imports from countries like Mexico and Canada, many Americans are wondering: How will this affect my wallet?
Financial expert Dave Ramsey and his co-host Ken Coleman recently tackled this issue on The Ramsey Show, breaking down the potential impact of tariffs on the average American. Their key takeaway? Prices will go up—but maybe not in the way you think.
Tariffs Explained: Who Actually Pays?
Ken Coleman was quick to point out that tariffs, while imposed on foreign countries, don’t just affect them – they impact American consumers as well. “There’s no question that tariffs are passed on from American companies to American consumers,” he explained.
When the U.S. places tariffs on goods imported from another country, those additional costs don’t just disappear. Instead, businesses absorb them and then pass them on to customers in the form of higher prices. Whether it’s cars, appliances, or groceries, any item imported under these tariffs is likely to become more expensive for the end buyer – you.
How Other Countries Play the Game
Dave Ramsey highlighted an important detail often overlooked in tariff discussions: other countries already charge tariffs on American goods.
Using Mexico as an example, Ramsey explained that the Mexican government currently imposes a 33% tariff on American goods coming into their country. That means if an American manufacturer sells an item worth $1,000 in Mexico, Mexican consumers end up paying $1,500 for that same item.
In contrast, when Mexico exports goods to the U.S., those products don’t face similar tariffs – at least not at the same rate. Ramsey pointed out that part of Trump’s tariff push is to even the playing field and pressure countries like Mexico and Canada into adjusting their own trade policies.
Will This Lead to a Trade War?
One of the biggest fears surrounding tariffs is the potential for a trade war. Many Americans worry that if the U.S. imposes tariffs, other countries will retaliate, leading to even higher costs on American goods abroad and a slowdown in international trade.
Ramsey acknowledged these concerns but pointed out that trade wars don’t always happen the way people expect. He noted that while tariffs can sometimes hurt economies, they don’t necessarily cause economic collapse. The key question, according to Ramsey, is whether countries like Canada and Mexico will adjust their trade policies in response.
Why Canadian Businesses Are Nervous
Ken Coleman added that Canadian business owners are particularly concerned about Trump’s tariffs. He mentioned speaking with several Canadian business leaders who are “very, very afraid” of the potential economic impact.
Canada, like Mexico, has benefited from more favorable trade terms with the U.S. for years. If the U.S. starts imposing new tariffs, Canadian companies that rely on American customers could struggle to compete with domestic alternatives. This could lead to job losses and economic downturns in Canada, which is why Canadian business leaders are watching the situation closely.
The Domino Effect on American Prices
So what does all of this mean for everyday Americans? Simply put: things will get more expensive.
If tariffs go into effect, goods imported from Mexico, Canada, and other targeted countries will cost more. That means:
- Cars made with Mexican parts could become more expensive.
- Groceries imported from Canada could see price increases.
- Electronics and household goods manufactured overseas could become pricier.
Ramsey emphasized that companies “do not eat taxes,” meaning they always pass increased costs onto consumers. So whether it’s tariffs or corporate tax hikes, the end result is usually higher prices for the American buyer.
Could Tax Cuts and Deregulation Offset Tariffs?
While tariffs might raise prices, there’s another side to the equation. Ken Coleman pointed out that Trump has also pushed for tax cuts and deregulation, which could help balance out the negative effects of tariffs.
If Trump extends his tax cuts, Americans would keep more of their paychecks, making it easier to absorb higher prices on goods. Additionally, if he reduces government regulations on businesses, companies could lower costs in other areas, which might offset price increases from tariffs.
Are Tariffs Just a Negotiation Tactic?
Ramsey believes that many of Trump’s tariff threats are simply a negotiation strategy. He explained that Trump often “throws a grenade in the middle of a negotiation” to shake things up, but that doesn’t mean all the proposed tariffs will actually happen.
“I don’t think there will be tariffs on Canada or Mexico,” Ramsey predicted. Instead, he believes Trump is using the threat of tariffs to pressure these countries into changing their trade policies in favor of the U.S.
What About Other Countries?
While Ramsey thinks Mexico and Canada might avoid tariffs, he isn’t so sure about countries like Vietnam. He pointed out that some nations impose high tariffs on American goods while benefiting from tariff-free exports to the U.S. That kind of imbalance, he argued, is more likely to result in actual tariffs being imposed.
If tariffs are placed on countries like Vietnam, goods from those nations – such as clothing and electronics – could see significant price increases in the U.S.
How To Protect Your Finances From Tariffs
So if prices are going up, what can you do about it? Ramsey and Coleman offered a simple solution: Get out of debt.
Ken Coleman reminded listeners that being debt-free is the best way to weather financial storms. If you’re living paycheck to paycheck, even small price increases can have a big impact. But if you’ve built financial stability, you won’t have to stress about slight changes in grocery or appliance prices.
“People who are debt-free aren’t worried about inflation,” Coleman said. “They can handle it.”
Don’t Panic—Yet
Finally, Ramsey offered a word of caution: Don’t panic over things that haven’t happened yet.
While the media often fuels anxiety over economic policy changes, many proposed tariffs never actually go into effect. Ramsey advised people to wait and see how things unfold before making drastic financial changes.
“If and when tariffs start affecting your wallet, then you can adjust,” he said. “But until then, it’s just speculation.”
The Bottom Line: Tariffs Matter, But So Does Perspective
Will Trump’s tariffs hurt your bottom line? The short answer: Maybe. If tariffs go into effect, prices on certain goods will rise. However, tax cuts and deregulation could soften the impact.
The most important takeaway from Ramsey and Coleman’s discussion? Stay informed, but don’t make financial decisions based on fear. If you’re smart with your money, avoid debt, and stay prepared, tariffs won’t be a financial disaster – they’ll just be another factor in the ever-changing economy.
Raised in a small Arizona town, Kevin grew up surrounded by rugged desert landscapes and a family of hunters. His background in competitive shooting and firearms training has made him an authority on self-defense and gun safety. A certified firearms instructor, Kevin teaches others how to properly handle and maintain their weapons, whether for hunting, home defense, or survival situations. His writing focuses on responsible gun ownership, marksmanship, and the role of firearms in personal preparedness.