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Thursday's tariffs could cost your family $2,000 a year — here's how to soften the blow
Yahia Barakah August 6, 2025 at 2:09 PM
New tariffs could cost your family $2,000 a year — here's how to soften the blow (SimpleImages via Getty Images)
When businesses face higher costs from supply chain disruptions, labor shortages or tariffs, they typically pass those expenses directly to consumers. It's why after an initial spike of 1.8%, Yale's Budget Lab estimates that the latest edition of tariffs that go into effect this Thursday could push overall prices up by 1.5% in the long run.
That might not sound like much, but we're talking roughly $2,400 in projected additional annual costs for an average American household in 2025, followed by $2,000 in the following years. And it varies wildly by category: Food prices may increase by 2.8%, clothing by 17% and electronics by an eye-popping 7.7%.
These aren't temporary blips. Yale expects higher costs to become the new baseline for everyday expenses.
While you can't control tariffs, you can control your response. Here are practical strategies to shield your finances from the fallout.
1. Build up your financial defenses
Year-over-year Inflation already jumped to 2.7% in June from 2.4% in May, and the Federal Reserve expects it to keep rising, potentially hitting 2.9% in August — well above its 2% target.
You're already feeling it at the grocery store, the gas pump and everywhere else you buy your essentials. But you don't need to stockpile goods or drastically change your lifestyle to prepare for higher prices. Instead, use these proven financial strategies to cushion the impact of rising costs.
Your first line of defense against price increases is optimizing your existing financial resources.
Protect your cash from inflation
Inflation steady weakens your cash's buying power, especially when prices rise faster than your savings grow. What's making matters worse is that the dollar has lost about 10% of its value against major currencies like the euro and the Japanese yen since the beginning of the year.
If your money is sitting in a regular savings account earning pennies, take 10 minutes out of your day to switch to a high-yield savings account (HYSA) that can help you stay ahead.
For money you won't need right away, certificates of deposit (CDs) offer guaranteed returns that won't change over the life of your account's term, even after rates on new CDs drop later this year.
Online banks typically offer the highest rates on both HYSAs and CDs while charging $0 monthly fees. Moving your emergency fund to a high-yield account could earn you an extra $350 to $400 each year on a $10,000 balance.
Learn more: As prices rise, my HYSA still beats inflation and traditional banks — here's how
Maximize your employer benefits
Many employees leave money on the table by not fully utilizing workplace benefits. If your employer offers a 401(k) match, contribute enough to get the full match. It's free money that helps build long-term wealth even as short-term costs rise.
Health savings accounts (HSAs) and flexible spending accounts (FSAs) let you pay for health care and dependent care with pre-tax dollars — effectively giving you a discount equal to your tax rate. Many employers also contribute matching funds to HSAs, giving you free money on top of the tax savings.
Trim unused subscriptions and recurring charges
The average person carries more than 4 paid subscriptions totaling some $925 a year. With everything getting more expensive, cutting those streaming services, gaming platforms and apps you're not using frees up cash for essentials.
Apps like Rocket Money and Pocket Guard can hunt down forgotten subscriptions and even negotiate lower rates on bills like cable and internet. Ditch just $50 in monthly subscriptions, and that's $600 a year in your pocket to fight back inflation.
Learn more: 20+ clever ways to save money
2. Turn credit cards into your secret weapon
Credit cards often get a bad rap. And while it might sound counterintuitive, when you use the right card and pay off your full balance each month, that plastic in your wallet can become a powerful financial tool to combat rising costs.
Maximize the cash back you earn on every purchase
Plenty of rewards cards can gift you small automatic rebates on the things you're buying every day. A flat 2% cashback card like Citi Double Cash keeps things simple by earning you $20 back on every $1,000 spent, no matter the category.
You can take it up a notch with cards offering targeted and rotating rewards in specific categories. Take the Blue Cash Preferred, which offers 6% back on groceries, with Chase Freedom Flex providing 5% back on rotating categories like gas, dining or groceries.
The average household spends $77,280 per year, according to the Bureau of Labor Statistics (BLS). If you use a simple 2% cashback card on $50,000 of that, you'd earn $1,000. Master bonus categories, and you're looking at $1,500 or more.
Learn more: Best cashback credit cards to save on groceries, gas and more
Use 0% intro APR cards for necessary big purchases
Need a major appliance, electronics or other big-ticket item that could get hit hard by tariffs? A 0% introductory APR credit card can buy you breathing room to pay it off. These cards typically offer 12 to 21 months of no interest on new purchases, balance transfers or both. Just make sure you can pay off the balance before the promo period ends.
Layer cashback apps and browser extensions
Beyond credit cards, cashback platforms can further stretch your savings. Apps like Rakuten offer cashback rates ranging from 1% to 20% at thousands of retailers you're already buying from. Ibotta provides rebates on specific grocery items, while Capital One Shopping automatically finds coupon codes at checkout.
And you can stack these savings with credit card rewards: Buy through Rakuten's portal with a 5% cashback offer and then pay with a 2% cashback card, and you'll earn 7% cash back to offset price increases — all without changing your shopping habits.
3. Squeeze more from every dollar
A few smart shifts in how and when you shop can help you save hundreds annually without sacrificing quality or convenience.
Use price trackers
Time your purchases around price drops and seasonal offers, and you can save a decent chunk of money on stuff you can wait for. Apps like CamelCamelCamel or ShopSavvy track prices on Amazon and other retailers, alerting you when the items you're looking for hit their lowest points.
Join warehouse clubs (if the math works)
Costco and Sam's Club memberships can pay for themselves if you shop for a family or use them enough. For example, if you'll save at least $10 to $15 monthly through bulk buying and member prices on items you're already buying, a membership club can make sense for your wallet.
Consider store brands
Store brands typically cost less than name brands, and many offer similar, if not better, quality than bigger names with higher advertising budgets. Kirkland is widely recognized by Costco stans for matching or exceeding national brand quality at lower prices. Add to that any store brands made by the same manufacturers as premium products, just with different packaging.
Learn more: Is Costco or Sam's Club worth it for empty nesters? We did the math
More stories about saving and managing your money -
Best high-yield savings accounts
Best apps to save money on food — from groceries to restaurants
How to build an emergency fund
Common bank fees — and how to avoid them
5 popular budgeting strategies — and how to find the best fit for you
📩 Have thoughts or comments about this story — or ideas on topics you'd like us to cover? Reach out to our team.
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