What are tariffs and will they impact your savings?

Whether you're tuned into the news or not, you've probably heard the word "tariff" thrown around a lot lately. Maybe you have a general idea of what it means — or maybe it just sounds like something that makes prices go up. Before you panic and start stockpiling goods, take a breath. Will tariffs impact your wallet? To some extent. But here's what you really need to know. 

What tariffs are

Tariffs may sound confusing, but put simply, they're taxes placed on goods and services imported from one country to another. Tariffs can serve a few purposes, but one of the main goals is to make imported items more expensive — making locally produced goods more competitive by comparison.  

Who pays the tariff costs?

The burden of tariffs usually falls on the exporting companies, businesses and consumers. Businesses typically absorb some of the cost and pass the rest on to consumer—like a hidden surcharge on your purchase. But even if an item is made in the U.S., it may still rely on imported materials, meaning manufacturers could raise prices to cover those added costs. Some companies, for example, have responded to recent tariffs by adding a flat $5 fee surcharge to cover the tariff costs.  

It might be a stretch to say tariffs will directly hit your savings — but it's not entirely off base. Tariffs can't affect what you already have in the bank, but they can drive up the cost of goods, which can affect how much you spend and how much you're able to set aside for savings.  

Tariffs don't directly impact interest rates, but they can influence them depending on how they affect manufacturing and consumption.  

According to Shelby McFaddin, investment analyst at Motley Fool Asset Management, if tariffs put enough strain on the economy — slowing down manufacturing and reducing consumer spending — it could lead to rising unemployment. When that happens, the Federal Reserve has to consider its dual mandate: keeping prices stable and supporting maximum employment. If the economy weakens enough, the Fed may respond by lowering interest rates to stimulate growth.  

So, while tariffs don't automatically change interest rates, they can trigger economic shifts that lead the Fed to adjust them. 

But despite high-yield savings rates dropping since the Federal Reserve began cutting rates late 2024, many accounts are still offering returns well above 4% — which is pretty solid for just letting your money sit there.  

The Happen Bank LevelUp Savings Account, for example, offers a solid APY and it comes with no minimum balance or monthly fees. The Western Alliance Bank High-Yield Savings Account also offers an attractive rate with just a $1 minimum deposit and no monthly fee requirements.  

Tariffs can feel overwhelming because their impact isn't always immediate or predictable, but the best thing you can do is not panic. While there's still no telling exactly how things will play out, if you want to make sure your finances are in a solid place — and that you're prepared at home — there are a few practical steps you can take now.  

Look at your budget 

When tariffs hit, your everyday expenses can quietly creep up — making it all the more important to revisit your budget and know exactly where your money's going.

The You Need a Budget (YNAB) app uses a zero-based budgeting method, where every dollar is assigned a specific job — like groceries, rent, or savings. It costs $14.99 per month or $109 annually, but you can try it free for 34 days. If you're looking for a free option, the Goodbudget app uses a digital envelope system that lets you divide your income into spending categories. It's free for up to 20 envelopes, or you can unlock unlimited envelopes for $10 per month or $80 per year. 

Avoid "panic buying" 

While you might also see advice encouraging you to stock up on things before prices rise or goods run out, that can quickly turn into "panic buying," which results in spending on things you don't need or won't use. Instead, McFaddin recommends starting simple and thinking practically about your actual needs.  

"In our house, we thought about things that would be really inconvenient if we couldn't get them for a week or two," she says. "For those things, we basically said, 'do we have some already? Let's get one more package'." 

Avoid dipping into investments 

Lastly, be cautious when it comes to your investments. If you're feeling financially strained, reducing your contributions slightly might be a better route than dipping into your accounts. Just be sure to move carefully and with intention by taking time to review your options, understand the long-term impact and avoid making impulsive decisions out of stress or fear.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Shelby McFaddin, investment analyst at Motley Fool Asset Management.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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