The Trump Administration is working to significantly reset the global trading system, with their focus to ultimately bring US firms to a level playing field and allow US firms to be more competitive with other nations. While there are a multitude of studies and opinions on the impact of proposed tariffs, in the short term, tariffs will have different cost impacts for various industries and goods. One of our biggest concerns is for small businesses that source their product(s) from outside the US, and how they will survive with reduced or minimal products to sell. With roughly 50% of employees working for firms employing fewer than 20 employees, the cost impact will be much greater than for large and mega firms who have strong cash flows and balance sheets to survive this process.
Utilized as a means of protecting and enhancing domestic industries, once enacted, tariffs can have far-reaching short and mid-term consequences for everyday consumer goods, including higher prices for everything from the food we eat to the electronics we use daily. According to the Peterson Institute for International Economics (PIIE), the average economic impact of tariffs on U.S. households could be $1,200 per year. This post will explore the financial sectors most affected by President Trump’s tariffs and offer guidance on how to protect your financial interests considering these changes.
How Long Do You Think These Tariff Wars Will Last?
That’s the million-dollar question. Tariff wars, especially those driven by geopolitical tensions and long-term economic strategies, rarely end quickly. While some are introduced as temporary measures, they often linger far longer than expected due to political inertia and unresolved trade disputes—as seen with many Trump-era tariffs that stayed in place even after leadership changes. Given this pattern, it’s wise for individuals and businesses to plan as though these tariffs could be around for the long haul, which means adjusting for sustained higher costs, supply chain disruptions, and prolonged economic uncertainty.
How Do Tariffs Affect Small Businesses and Individuals?
Tariffs often hit small businesses and everyday people the hardest. Unlike large corporations that have broader supply networks and stronger financial buffers, small businesses face tough choices when import costs rise—either absorb the hit and shrink their margins or raise prices and risk losing customers. For individuals, especially those in lower- and middle-income brackets, tariffs show up as higher prices on essentials like food, cars, and electronics—expenses that grow faster than wages. Beyond price increases, tariffs can also threaten jobs in sectors like manufacturing and retail if businesses are forced to cut back or close. All in all, tariffs create a chain reaction that makes it harder for small businesses to thrive and for families to stay financially stable.
Financial Sectors Most Affected by President Trump’s Tariffs
1. Food and Beverage
One of the primary sectors impacted by tariffs is likely to be food and beverages. Consumers, especially those with limited financial means, are disproportionately affected by rising food costs because they tend to allocate a larger share of their income to basic necessities such as food. Key food imports from Mexico and Canada are particularly vulnerable to tariffs. For example, Mexico is a major supplier of fruits and vegetables, while Canada exports essential food products like canola oil, red meat (including beef and pork), and processed frozen foods. As noted by Investopedia, these price increases hit low-income households hardest, as they have fewer financial resources to absorb higher prices. The added cost of these imported goods could lead to higher prices on grocery store shelves, further straining household budgets.
2. Cars, Car Parts and Electronics
Another area where tariffs are likely to have a significant impact is in the automobile industry. Some estimates project that tariffs could add as much as $3,000 to the price of a new car, with most, if not all of this increase passed directly to consumers. Car manufacturers in the U.S. rely heavily on Mexico and Canada for car assembly and key automotive parts. As reflected in a recent “The Daily Spark” by Torsten Slok, Chief Economist for Apollo Global Management, cars, car parts, and trucks and buses play at key role in trade with countries including Mexico, Germany, Japan, South Korea, Canada and United Kingdom. The Tariffs on these parts, as well as on finished vehicles, increase the overall cost of producing cars in the U.S., making them more expensive for buyers. This can also extend to other consumer electronics that rely on global supply chains, particularly those with components sourced from China, adding to the overall price increase for everyday goods.
3. Building Materials and Home Goods
The building materials and home goods industries are also under pressure from tariffs. Two essential materials used in new home construction—softwood lumber from Canada and gypsum (used for drywall) from Mexico—are subject to tariffs that drive up costs for builders. According to the National Association of Home Builders (NAHB), these price increases ultimately affect homebuyers, as the cost of new homes rises with the increased price of construction materials. Home renovation projects are also affected, as homeowners may face higher prices for materials like drywall and insulation. This could have a ripple effect on the housing market, potentially making homes less affordable for those looking to buy or renovate. With the existing overall shortage in the housing market, this could extend the challenges this sector faces in closing the demand vs supply gaps.
4. Financial Protection Strategies
In light of growing concerns around the economic impact of tariffs, consumers must be proactive in protecting their financial well-being. One key strategy is budgeting for higher living expenses over the remainder of 2025, particularly for food related goods, new cars, and home repairs. It’s also worth considering strategies such as buying in bulk for essential everyday items with rising costs or exploring alternative suppliers for goods that will be heavily impacted by tariffs.
Additionally, for investors, exploring industries less vulnerable to tariff-related price increases, such as technology or services, could potentially provide better return outcomes compared to sectors and industries likely to be heavily impacted from tariffs over the remainder of 2025 and beyond.
Conclusion
While tariffs are often promoted as a tool for safeguarding American industries, their broader impact on the economy can be substantial. Whether it’s the food on your table, the car you drive, or the home you’re building or remodeling, the cost of everyday goods is rising due to tariff policies. Understanding how tariffs affect various sectors can help you make informed financial decisions and better protect your financial interests in the face of increasing costs.
At Konza Global, our personalized wealth management services are tailored to your unique financial needs. Contact us today to begin your path to financial security.
Frequently Asked Questions
Why do tariffs make everyday goods more expensive?
Tariffs are essentially taxes on imported goods. When a tariff is placed on a product from another country, it raises the cost for the business importing it. To stay profitable, that business usually passes the extra cost onto the consumer—meaning you pay more at the store for the same item.
Are small businesses affected more than big corporations?
Yes, typically. Small businesses have less flexibility in their budgets and fewer options for alternative suppliers. While big companies may have global sourcing networks or larger profit margins to cushion the blow, small businesses often have to raise prices or cut expenses just to stay afloat.
Can tariffs lead to job losses in the U.S.?
Unfortunately, yes. When tariffs increase the cost of doing business, especially for companies tied to global supply chains, they may be forced to cut back—laying off workers, reducing hours, or even closing down. This is especially true for industries like manufacturing, agriculture, and retail that rely heavily on imports or export markets.
This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Konza Global Advisory, LLC in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.
The information contained in this writing should not be construed as financial or investment advice on any subject matter. Konza Global Advisory, LLC expressly disclaims all liability regarding actions taken based on any or all the information in this writing.
