Buy now? From cars to groceries, here's your money playbook for Trump's trade war.

MW Buy now? From cars to groceries, here's your money playbook for Trump's trade war.

By Andrew KeshnerVenessa Wong

Make purchases now if you've already budgeted for them, stick to what you can afford and don't panic shop, financial experts say

By the time President Donald Trump returned to the White House last month, Leslie Kerner had already been saving to replace her Buick Enclave, and had her eye on a Toyota Grand Highlander. As the president had been threatening to impose new tariffs, "we thought, since we're going to be making this purchase anyway, we should just accelerate it and do it now," Kerner told MarketWatch.

She moved some savings around in order to make the purchase earlier than anticipated, and bought a new Grand Highlander for about $60,000 during the last week in January, just days ahead of Trump approving new tariffs on imports from Mexico, Canada and China, which were widely expected to impact the U.S. car industry. (On Monday, Trump paused the tariffs against Mexico and Canada for 30 days.)

In the fast-moving joust on Trump's tariffs against Mexico, Canada and China - which remain in flux - Americans looking to spend strategically should either move quickly to buy a big-ticket item they've already budgeted for or hit the brakes and wait if they can't afford to buy it now, financial experts told MarketWatch on Monday as trade tensions escalated and rattled markets. No matter what, consumers should avoid panic buying.

"Either you purchase on a more immediate basis, or you put it off indefinitely until the prices are attractive again," said Steven Conners, the founder and president of Conners Wealth Management in Scottsdale, Ariz.

If someone had already planned to make a big-ticket purchase within the next month or so, the imminent tariffs might accelerate that decision to the next week or two, he said. That includes the purchase of cars, home appliances and electronics, Conners said - but not homes.

While those with a financial cushion may try to time their purchases in anticipation of higher prices in the future, many other consumers will simply buy less. In a survey conducted last week for the online-shopping rewards app Smarty, half of respondents said they will buy less or buy secondhand if tariffs increase prices.

To be clear, panic-buying isn't the solution, said David Zavarelli, a financial adviser with LPL Financial. Fast-tracking a purchase "should only be considered if the purchase was already budgeted for and imminent. Consumers should not start stocking up on or buying items that they cannot afford, given the threat of tariffs," he said.

Related: Trump's tariff moves upend inflation expectations in financial markets

For months, some price-sensitive consumers have been trying to shop strategically with possible tariffs in mind. Those tariff threats became a lot more real in recent days: Trump announced 25% tariffs on Mexican and Canadian imports over the weekend, as well as 10% tariffs on China. And Canadian energy exports faced a 10% levy.

Canadian officials countered with tariffs on American imports that were to begin Tuesday, adding a 25% duty on a wide range of produce, meats, dairy products, liquors and other commodities.

But on Monday, Trump, Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau said that the U.S. tariffs on Mexico and Canada would be paused for a month. Trump said in a Truth Social post that the U.S. and Mexico will keep negotiating as Mexico sends 10,000 troops to the border to address illegal immigration and curb the flow of fentanyl. The Canada tariffs were paused later Monday afternoon.

The political maneuvering over borders and trade will also mean a headwind for consumers, if businesses bake their higher costs into final prices. And Americans are all too familiar with high prices, as the economy emerges from inflation rates that hit a four-decade high in 2022.

U.S. consumers could face "some pain" from tariffs, Trump said Sunday. Tariff critics have long argued the duties aren't worth the pain of higher goods and services. Households would lose around $1,250 in purchasing power annually if tariffs on Canadian, Mexican and Chinese imports went forward as planned, according to the Budget Lab at Yale University.

Car buyers would feel the biggest impact from tariffs

Agriculture, consumer goods and energy are some of the industries most exposed to tariffs and countermeasures, experts at Moody's said. One of the biggest impacts of the potential new tariffs would be felt by car buyers, who already face a historically unaffordable market.

Still, with the average tariff estimated to be more than $5,800 on car models assembled in Canada or Mexico or those with parts from those countries, according to Cox Automotive, consumers who have saved to buy a car may find that "now is as good a time as any to purchase a vehicle," Erin Keating, executive analyst at Cox Automotive, told MarketWatch.

"The best advice I can give consumers is [to] understand what your total cost of ownership is going to be," she said. "Understand what you can spend on a monthly basis on the car payment, if there is one, on insurance and everything else that goes along with it."

Personal-finance experts suggest the total cost of car ownership should not exceed 10% of take-home pay, which amounts to about $400 each month for the typical U.S. household. If car prices rise, people may need to compromise on certain features or trade down to stay within their budget, Keating said.

Related: Here's how much the planned Trump tariffs would add to the average car price

While the status of the tariffs remains in flux, consumers looking to play it safe may find that "purchasing sooner rather than later may be the best way to avoid potential price hikes," said Jessica Caldwell, Edmunds' head of insights.

In the Smarty survey, 16% of respondents said they planned to buy a car ahead of tariff-related price increases, while 24% said they would hold off. However, greater shares of consumers said they would expedite their purchases of electronics (28%) and appliances (22%) than those who said they would hold off (20% and 21%, respectively).

How to be a savvy grocery shopper if tariffs hit

Some people can accelerate or delay major purchases in the hopes that trade fights blow over, but most can't hold off on buying necessities like groceries.

If tariffs do take effect, it may take three to four weeks before higher costs for grocers translate into higher prices for consumers, according to Phil Lempert, editor of Supermarketguru.com, a website focused on the grocery industry. The exception may be retailers who are "opportunistic and raise prices right away," he said.

There are still ways to make the best of the situation, Lempert said. "If you want to stockpile some things, that's fine, but don't panic. Don't go overboard," he said. Emptying store shelves might only prompt price surges, he noted.

Think of what's nonperishable or able to be frozen, Lempert said. A sizable portion of meat in American grocery aisles comes from Canada, he noted. Shoppers can buy and freeze meat while stocking up on shelf-stable pasta and canola oil, which also commonly originates from Canada.

If stores raise prices ahead of tariff hikes, people should be ready to shop for the typically cheaper store brands of various products, also known as private-label goods - or just at other retailers selling the same products for cheaper. "We as consumers have to be really smart," Lempert said.

If tariffs push consumer prices higher, people might also want to take a hard look at what they are paying for at the grocery store and elsewhere, said Eric Elkins, the founder and CEO of Double E Financial Solutions.

"This is as good a time as any to examine spending, and reduce any waste that may have crept in," added Tipiwa Walker, principal adviser at Lucre Advisory.

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-Andrew Keshner -Venessa Wong

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February 03, 2025 17:28 ET (22:28 GMT)

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