As we move through 2026, we wanted to provide an update on how President Trump’s trade policies are impacting American consumers.

While the news media is no longer publishing daily headlines about Trump’s trade policy, we continue to experience price pressure in key sectors such as manufacturing and consumer goods. And, although inflation has cooled since its highest levels, consumers, businesses and investors continue to experience uncertainty. Aware of these pressures, the Federal Reserve has kept the fed funds rate steady at 3.5% to 3.75%, even as markets price in potential cuts later this year.

The Impact of Tariffs

In 2025, the Trump Administration enacted broad tariffs, including a minimum 10% rate on many global imports, higher country-specific rates and sector-targeted levies on specific goods such as steel, lumber and consumer products. The objectives of these tariffs are to protect U.S.-based industry, reduce trade deficits and generate revenue. And it’s working to a certain extent, as some customs collections are estimated to have tripled when compared to previous years.

The average effective U.S. tariff rate in early 2026 reached as high as 15% to 17% and remains significantly elevated, with current rates ranging between approximately 10% to 13%. This continues to be a significant increase over pre-2025 levels of 2% to 3%. As a result, manufacturers and retailers face higher costs, which they often pass on to consumers. Also, sectors that rely on global supply chains, such as apparel, appliances, vehicles, electronics and building materials, continue to face pressure.

Inflation Trends

Recent inflation data reflects a mixed picture.

• Headline Consumer Price Index (CPI) eased to 2.4% year-over-year in January, down from 2.7% in December 2025. This marks the lowest CPI since mid-2025, and was likely supported by lessening energy prices, favorable base effects and certain seasonal factors.

• Core CPI, which excludes food and energy, held steady near 2.5%, its lowest level in several years but still above the Fed’s long-term 2% target. Persistent drivers of this rate include shelter expenses, which have increased by approximately 3% annually, and higher costs for certain services.

This “stickiness” in core measures suggests that while inflation has cooled toward the Fed’s goal, underlying pressures persist. Tariffs add to this by elevating the price of goods, which counteracts other disinflationary forces.

The Fed’s Cautious Approach

Following its meeting in March, the Federal Open Market Committee held the federal funds rate steady at 3.5% to 3.75%. The decision was made based on the Fed’s assessment of steady economic growth alongside somewhat elevated inflation, as well as ongoing uncertainty from both geopolitical developments and trade policy. However, markets seem to be pricing in the possibility of rate cuts later in the year, especially if inflation trends continue to moderate and the labor market remains stable.

What This Could Mean for You

The combination of tariff-driven price pressures and sticky core inflation could continue creating challenges for Americans, including:

• Higher costs for goods – Particularly for items that rely on global supply chains, such as apparel, appliances, vehicles, electronics and building materials

• Investment ramifications – The potential for greater portfolio volatility due to uncertainty

• Retirement income challenges – Ongoing inflation that exceeds 2% means that retirement withdrawals must stretch further, while fixed income investments could face reinvestment risk if rates eventually fall.  

The good news is that headline inflation is meaningfully lower than it was, and many companies are bringing down costs by diversifying suppliers.

If tariffs, inflation or interest-rate uncertainty are keeping you up at night, we’d love to have a conversation about how we can help improve your financial confidence. Please reach out to schedule a call with a member of our team.