Major Bank Says Tariffs Will Likely Push Inflation Higher in the Second Half of 2025: 5 Ways To Prepare Now
Written by
John Csiszar
Edited by
Levi Leidy
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
According to J.P. Morgan Global Research, the inflation caused by recently implemented tariffs has yet to fully show up in American economic readings. The highly respected bank sees core personal consumption expenditures (PCE) inflation rising to a quarterly annualized rate of 4.6% in Q3 2025. The bank’s chief U.S. economist, Michael Feroli, says that “consistent with the experience of 2018-19, we expect that it will take two to four months for the peak effects of tariffs to be seen.”
In other words, the worst is yet to come. But what does an increased PCE rate mean for the average American, and what are the consequences if J.P. Morgan’s predictions come to pass? Here’s how you can prepare now.
Find Out: 8 Smart Ways Frugal People Are Living Like There’s Already a Recession
Economic Scenario
Although inflation has declined fairly sharply from its peak of 9.1% in July 2022, it’s likely to bounce higher from current levels. NPR agrees with J.P. Morgan’s assessment that it’s all but inevitable that prices increase for certain goods in coming months.
In July, for example, General Motors reported that it lost $1.1 billion in revenue to tariffs in just the previous quarter. That’s an unsustainable business model over the long run. Most likely, companies like GM will find a way to share costs between itself, its supplier and consumers. That means higher prices.
The Budget Lab at Yale says that tariffs will hit different industries disproportionately, with clothing and textiles taking one of the biggest hits. According to the Budget Lab, shoe prices may rise as much as 39% over the short run, with apparel prices rising 37%. Over the long run, prices for both products are seen remaining 18% higher than current levels.
Something that may help keep inflation in check is a tighter labor market. While mass layoffs have yet to materialize, the job market is getting tighter. According to NPR, companies are dealing with the higher actual costs of tariffs and the uncertainty surrounding them and the general economy, forcing them to reduce hiring. An economy with rising costs and shrinking job security, of course, is not the type of scenario the average American wants to face.
How To Prepare
With all of this in mind, here are some steps you can take to hunker down and play a bit of economic defense.
Prioritize Large Purchases Now
While you shouldn’t go out on an unplanned spending spree, if you’re already in the market for some high-ticket items, such as TVs, cars, appliances and electronics, consider buying now, before companies raise prices in response to the tariffs. Also, keep your eyes out for sales. Many companies are rolling out “tariff sales,” and they are always holiday promotions, whether it’s Labor Day or Black Friday.
Boost Your Cash Reserves
In any time of economic uncertainty, cash is king. Beef up your emergency fund and consider restricting nonessential purchases. After you’ve bought the pricey things you need before they get hit by tariffs, hunker down and avoid making unnecessary purchases.
Shop Domestically
Many domestic businesses get parts from overseas, so they may be subjected to tariffs as well. But if you can find companies that are completely United States-based, they may be able to hold costs down more. Seeking out these types of shops may help you avoid some of the tariff-related price increases you’ll see at other companies.
Pay Down Debt
Debt can wreck any household budget, and things only get worse if prices and job insecurity are rising. Do all you can to wipe out or at least reduce your debt before the tariff economy really gets going. If that’s not an option, try to find a 0% balance transfer offer so that you can at least free up some of your cash flow every month during these uncertain times.
Nail Down Your Job Security
You may not be in complete control of your job security, but do all the things you can to make yourself indispensable at work. Finish your projects on time, go the extra mile and do anything that makes you stand out to your employer so that you’re not even considered if layoffs should arrive.
More From GOBankingRates
