How tariffs impact Canadians—and how to prepare if you’re facing debt

Discussions about tariffs and their impact on Canada’s economy have been dominating the news since US President Donald Trump took office in January 2025. In his first month of presidency, his administration announced intentions to impose a 25% tariff on all Canadian goods crossing the border, except for energy that would see a 10% tariff. This was set to begin on February 4, 2025. In a countermeasure, outgoing Prime Minister Justin Trudeau announced intentions to levy a 25% tariff on $155 billion of US goods. However, mere hours before tariffs on both sides of the border were meant to be implemented, the US and Canada came to an agreement to halt implementation for at least 30 days. While we don’t know for sure what’s in store for these tariffs, there are things Canadians can do to prepare.

What are tariffs and how will they impact your finances?

Tariffs are essentially taxes imposed on imported goods, making those products more expensive. When the Canadian government places tariffs on foreign goods—or when other countries impose tariffs on Canadian exports—it can have a ripple effect on the economy. Businesses often pass increased costs onto consumers, leading to higher prices on items like groceries, electronics, and household essentials.

For Canadians already facing financial strain, rising costs due to tariffs can make it even harder to manage debt, save money, and cover basic living expenses.

How tariffs affect the cost of living

Tariffs can drive up prices in several ways:

• Higher costs for imported goods: If Canada imposes tariffs on products from countries like the US, the cost of imported items rises, leading to higher prices at the checkout.
• Increased business expenses: Companies that rely on materials and goods from the US may pay more to import them, passing those costs to customers.
• Job market uncertainty: If tariffs slow trade, industries that depend on exports—such as manufacturing, agriculture, and energy—could see job losses or wage stagnation.

For Canadians already struggling with debt, even a slight increase in costs can have serious consequences.

How to prepare your finances

If you’re carrying debt and worried about rising costs, taking proactive steps can help you stay ahead:

1. Review and adjust your budget

   It’s important to be proactive with your budget now so you can be more prepared for changes that might effect your finances. Start by reassessing your spending and identify areas where you can cut back. Focus on essentials, reduce non-essential spending, and look for ways to stretch your budget.

2. Prioritize high-interest debt

   Tackling high-interest debt (like credit cards) first can help you save money on interest payments. Consider consolidating debt to secure a lower interest rate.,

3. Build an emergency fund

   If there’s room in your budget, build an emergency fund to cushion against unexpected expenses caused by inflation and economic shifts. Even small contributions can add up over time.

4. Look for cost-saving alternatives

   With prices rising, consider generic brands, second-hand shopping, and bulk purchases to reduce costs. Also, look for local alternatives to imported goods. There are lots of products made right here in Canada!

5. Talk to a Licensed Insolvency Trustee

   If you’re struggling with debt, a free consultation with one of our experienced Licensed Insolvency Trustees can help you find the best solution to manage your debt.

Tariffs may be beyond our control, but how we respond to economic shifts isn’t. By making smart financial decisions now, Canadians facing debt can better prepare for the rising costs that tariffs may bring. Book your consultation today.