5 Ways To Offset Trump’s Tariff Price Hikes With Your Tax Refund
Written by
Jordan Rosenfeld
Edited by
Jasmine Browley
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Tariffs and inflated living costs have been a major topics of conversation since Donald Trump became the U.S. president for a second time. He has already imposed additional tariffs on Canada, Mexico and China (although some are currently paused), driving up consumer fears of price hikes, as tariffs on imported goods tend to trickle down to the consumer.
However, tariffs are not exclusive to this current administration. President Joe Biden also initiated tariff increases during his term and upheld some of Trump’s first-term tariffs. No matter who imposed them, the nonpartisan Tax Foundation analyzed that this round of tariffs could incur, at minimum, an extra $830 for U.S. households annually.
If you’re due a tax refund, however, you can offset some of these tariff increases through strategic spending of any money coming back to you.
Investment Strategies
Andrew Lokenauth, founder of BeFluentInFinance.com, recommended investing your tax refund, which could help you grow money to outpace those extra expenses and combat rising prices.
The key investments he recommended are:
- Dividend-paying stock: blue-chip companies, in particular, often produce dividend income
- treasury inflation-protected securities (TIPS): They’re designed to keep pace with inflation
- real estate investment trusts (REITs)
Bulk Purchasing Plans
Another good way to stretch your dollars is to think in bulk terms, Lokenauth recommended.
This includes stocking up on nonperishable items before prices increase further, joining wholesale clubs like Costco or Sam’s Club and looking for bulk deals on household essentials. It might not hurt to buy ahead for off-season items you know you’ll need next year now when they’re cheaper.
Improve Energy Efficiency
With tariffs potentially affecting the cost of imported fuel and materials, making a home more energy-efficient is a proactive way to combat rising prices, according to Wes Lewins, chief finance officer at Networth.com.
“Installing solar panels, purchasing energy-efficient appliances or improving home insulation can reduce electricity bills, softening the financial strain of increased utility costs,” he said.
Build an Emergency Fund
Another option is to use the refund to build an emergency fund, providing financial cushioning against inflationary pressures, Lewins pointed out.
“Having a dedicated savings account to cover unexpected expenses can prevent reliance on high-interest credit options, which become more burdensome as living costs rise,” he said.
Smart Shopping Strategies
Lokenauth suggested that consumers utilize innovative shopping strategies to stretch their tax refunds past tariff increases. These can include downloading free price comparison apps, applying for cash-back or other rewards-based credit cards or shopping apps and using top-ranked couponing apps.
According to Dennis Shirshikov, head of growth and engineering at Growthlimit.com, a less obvious approach is to pool resources with friends and family.
“Some people start group buying clubs that allow them to purchase big-ticket items or everyday essentials at reduced rates, effectively diluting the extra tariff costs. This sense of community lowers expenses and creates a buffer of shared resources that can help everyone feel more secure should the economic environment shift again,” Shirshikov said.
A timely tax refund can be the most powerful way to offset tariff-driven price hikes by thinking creatively and acting ahead of the crowd.
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