Investing in 2026: What Tariffs and Inflation Could Mean for Your Money Next Year

Yahoo

14 hours ago

Concerns about the impacts of tariffs imposed by President Donald Trump and the potential for inflation to keep rising have many Americans worried about what 2026 could bring.
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Everyone wants their investments to continue to do well, be they retirement accounts or individual brokerage accounts, though many factors are out of their control.
Experts explained what the average American investor needs to know about the impact of tariffs and inflation on your money next year.
Tariffs Are a Tax Paid by American Consumers
The hard reality is that high, across-the-board tariffs hurt everyone, according to John Lash, GVP of product strategy at e2open, a supply chain platform.
'Despite the rhetoric, these tariffs are a tax paid for by American consumers, plain and simple. The same goes for retaliatory tariffs by foreign nations on U.S. exports. Higher taxes mean higher prices,' he said.
While tariffs themselves are not inherently bad when used sparingly to protect the economy, he warned, 'When used indiscriminately, tariffs become a blunt tool — more like an economic cudgel.'
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How Tariffs and Inflation Could Undermine Your Savings
Tariffs could affect your savings in three main ways, according to Bradley Thompson, CFA, a financial professional with New Canaan Group in alliance with Equitable Advisors.
Your short- and long-term spending, and therefore how much of your income you can save.
The amount of interest you receive from your current savings.
The value of your investment savings.
Inflation also affects savings through rising prices and the way people spend money. 'You're seeing this already through a combination of anecdotal evidence and real data, for example in the used car market. Higher auto prices played a role in offsetting lower energy costs in last week's PCE numbers as consumers moved forward purchases of cars to avoid higher prices later,' Thompson said.
He added that a significant portion of gains on savings comes from treasury interest. 'If rates are cut at the same time prices are higher it could doubly impact the savings/spending rate of retirees.'
Consumers with high accumulated cash balances in high-yield savings or money markets should look to lock in higher rates now for savings they don't need soon.
A Dangerous Feedback Loop for Prices
If higher inflation plus tariffs continue to drive consumer behavior, it could lead to a self-perpetuating problem, Thompson warned.
'This could create a negative feedback loop where higher prices beget higher prices,' he said. Workers would likely start to demand higher pay, forcing inflation higher. 'This is called a wage price spiral and something the Fed is keen to prevent.
'If there is a short, temporary shock to the economy via a one-time price increase, consumers can likely withstand it, albeit with some pain, because savings rates are still positive and demand and spending are still strong.'
However, there are signs of concern including 'cracks in consumer credit such as a higher number of consumers making minimum payments on credit cards as well as rising auto and mortgage delinquencies.' This shows there may be limited capacity for individuals to pay higher prices and still continue saving, 'but it's not at alarming levels yet.'
How the Stock Market and Your Wealth Could Be Affected
The average American is more invested in stocks than ever before, so what happens to the stock market affects them more dramatically, Thompson said.
The market is a leading economic indicator due to the 'wealth effect,' in which people who feel wealthier (through stock gains) are more inclined to spend, borrow and change jobs. The opposite is also true.
'We're already seeing heavily depressed consumer sentiment numbers that reflect high degrees of uncertainty about the future,' Thompson warned.
If tariff policy continues to weigh down corporate earnings, it could cause further drawdowns of the stock market.
'This could produce a second negative feedback loop where people feel poorer and therefore try to spend less, further dampening corporate earnings … and that in turn could impact their long-term savings by depressing their rate of return on their assets during the wealth accumulation phase of their lives.'
Where Experts Say To Invest in 2026
In an inflationary environment reinforced by tariffs, Michael Von Bevern, co-managing director of Suntera Fund Services, suggested investors should tilt 'toward assets with built-in inflation resilience.'
'TIPS and commodities are the usual suspects, but in private markets, we're also seeing increased allocation to floating-rate private credit, infrastructure assets and businesses with recurring revenue models and high gross margins.'
These structures can absorb cost increases and still maintain earnings stability, he explained.
He also suggested sectors like domestic agriculture, U.S.-based hardware manufacturing and renewable energy could benefit from these changes.
'These sectors have typically flown under the radar but are becoming more investable as tariffs increase the competitiveness of U.S. output.'
Prepare, Don't Panic
While talk about tariffs and inflation may feel overwhelming, they have very real consequences for everyday consumers and investors. From higher prices at checkout to volatile market returns and changing savings strategies, 2026 may bring a need to be more deliberate about your finances.
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This article originally appeared on GOBankingRates.com: Investing in 2026: What Tariffs and Inflation Could Mean for Your Money Next Year