Tariffs 101: What They Are and How They Impact Your Finances

Tariffs have been a hot topic in global trade for years, and in 2025, they remain a key tool for governments shaping economic policy. With ongoing trade tensions, supply chain shifts, and inflation concerns, tariffs can have real-world effects on businesses, consumers, and investors. Here is a breakdown of what you need to know about how tariffs work and how they might impact your finances today.

What Are Tariffs and Why Do They Matter?

A tariff is a tax imposed on imported goods by a government, making foreign products more expensive. While tariffs are often used to protect domestic industries, they can also raise prices for consumers and disrupt global supply chains.

Why do Governments Use Tariffs?

1. Protect Domestic Industries: By making imported goods more expensive, tariffs help local businesses stay competitive.
2. Generating Revenue: Tariffs provide an additional source of income for governments.
3. Trade Negotiating Leverage: Countries may use tariffs as a bargaining tool in trade agreements.

What Tariffs Mean for Investors:

For investors, tariffs can influence market sectors differently. Companies that rely heavily on imports (Like tech and retail) may see increased costs, while domestic manufacturers may benefit. With some uncertainty it is important to reflect on your investment philosophy, staying diversified and invested.

Diversification matters, especially in times of uncertainty. Global trade tensions can lead to market swings, making diversification across various industries and asset classes is even more critical.

Final Thoughts:

Tariffs and shifting trade policies are just one of many factors that can create economic uncertainty. While market fluctuations are inevitable, history has shown that a well-diversified portfolio and a long-term investment strategy can help weather these storms. Rather than reacting to short-term volatility, staying invested, and maintaining a balanced approach can position you for success in any economic environment.

If you have any further questions or want to know how we are staying diversified through any industry changes, please don’t hesitate to reach out to your advisor or reach our firm at  contactus@thrivewealth.com.