Americans have heard the word “tariffs” so many times in 2025 that one would think they have largely grown complacent about them. Though, tariff fears and the S&P 500 has notched record levels as of July 23.
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On the very same day, President Trump announced tariff rates in the 15% to 50% range, as reported by Bloomberg.
The risks posed by tariffs to the American economy have not disappeared. As you look to protect your own pocketbook, keep an eye on these risks — and these options to hedge against them.
Inflation Uncertainty
In June, the first signs of tariff-induced inflation started popping up in the Labor Department’s CPI report. Annual inflation reversed its downward trend and jumped from 2.4% to 2.7%. Core inflation rose to 2.9% and food prices have hiked up 3.0%.
“Many businesses try to temporarily absorb higher costs before passing them to consumers, but over time this just isn’t fiscally possible,” explained Rachel Gustafson at Financial Investment Team, certified financial planner (CFP). “I have been advising clients to prepare for costs going up.”
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So what should you do as a consumer? Gustafson said the first step is simply tracking your spending with more precision. “Most families I work with, even high-income earners, don’t know how much they are spending and in what categories. A comment I hear often is ‘I used to leave the grocery store with a $150 bill, now it’s more like $250.'”
Beyond better tracking and budgeting, aim to invest in inflation-resilient assets like real estate, commodities, precious metals and stocks. The dollar might plummet in value, but real assets and cash-flowing businesses simply adjust in price accordingly.
Heightened Recession Risk
A survey by LifeStance Health found that 83% of Americans report feeling financial stress driven by recession concerns, layoffs, inflation and rising living costs.
They’re right to prepare for a recession. Investment giant J.P. Morgan forecasts a 40% chance of recession in 2025.
As for how to prepare, start by tightening your spending and deepening your emergency fund. EinatSteklov, CEO of employee benefit and loan company Kashable, urged workers to level up their personal finance game. “Budgeting resources, emergency savings programs and financial education all help workers anticipate and manage cost increases without destabilizing their financial lives,” Steklov said.
But you can and should do more than just save more money. Look for ways to both earn more and to protect your income better. That could include adding side hustles to diversify your income streams, but it can also mean making yourself irreplaceable to an employer. “Ask yourself ‘Are there opportunities to move into a higher paid position? Is there another industry I am interested in pursuing? Have I received a pay increase recently and if not am I able to ask for one?'” Gustafson added.
Heightened Market Volatility and Geopolitical Risk
Between trade wars, hot wars in the Middle East and Europe and ongoing tariff uncertainty, geopolitical risk has sent financial markets seesawing with volatility. Visual Capitalist points out that the VIX volatility index in 2025 is showing higher readings than six out of the last eight years — a period that included the COVID-19 pandemic.
You can also see it in record-high gold prices, long considered a safe haven from geopolitical risk and volatility. Year to date, gold is up 29.2% per Yahoo Finance.
How Should Investors Protect Themselves?
First, don’t panic sell. “Reacting emotionally to short-term market movements or trying to time the market usually leads to poor outcomes,” explained Dr. Alex Michalka, head of investments at Wealthfront. “One helpful strategy might be to check your portfolio less frequently while the market is volatile.”
Michalka also recommended diversifying. “If your portfolio is heavily concentrated in stocks, adding other types of assets can help reduce risk and bring your overall strategy into better balance,” Michalka said. Again, real assets like precious metals, commodities and real estate can not only help you diversify but also hedge against inflation.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 3 Reasons You Should Do More Than Save Your Money Amid Tariff Uncertainty
