Ever since President Donald Trump took office, Americans have grappled with economic uncertainty.
For one thing, inflation has been stubbornly elevated, keeping prices high.
Related: Warren Buffett has harsh words for stock market investors
Americans may have had an easier time dealing with inflation when their bank accounts were loaded with pandemic-era stimulus funds. But at this point, for the most part, that money is gone.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletterđź’°đź’µ
Now, consumers have to manage higher costs without free government money to bridge the gap. And many are struggling.
For some, that’s meant cutting back on discretionary spending. For others, it’s meant having to make very difficult choices, like skimping on essentials such as food and health care.
Tariffs have complicated an already uncertain economy.
Image source: Paul Morigi/Getty Images for Fortune/Time Inc.
The threat of tariffs has many Americans worried
Compounding the problem of inflation is the threat of tariffs.
Tariffs were a big part of Trump’s presidential campaign, and he made it clear from the start that he was looking to impose high tariff rates on a number of key U.S. trade partners.
Related: Warren Buffett sends blunt message on Social Security
The president’s initial tariff announcement in early April drove the stock market into a tailspin. The S&P 500 index took an immediate nosedive, losing more than 10% of its value in only three trading days.
In an attempt to stop or minimize the bleeding, President Trump made the decision to pause tariffs temporarily, postponing them until early July initially. He then extended the pause through August 1.
But with the end of that pause looming, it’s hard for consumers to know what’s in store.
And the big fear, of course, is that harsh tariff policies will spark a massive trade war and send prices soaring at a time when Americans simply cannot afford to see their living costs rise.
Related: This plush toy is making Warren Buffett even richer
Warren Buffett sends blunt message on tariffs and trade war
Investing giant Warren Buffett does not seem to be a big fan of the Trump administration’s tariff strategy. Earlier this year, in an interview with CBS News, he even called tariffs “an act of war, to some degree.”
“It may not draw blood immediately, but make no mistake — it’s an act of aggression that invites retaliation,” he said.
Related: Warren Buffett’s blunt Social Security warning is becoming reality
Buffett has long championed free and fair trade. And the fear is that strict tariff policies could lead not only to economic instability for the U.S. in the near term, but also to long-term trouble.
During the most recent Berkshire Hathaway annual shareholder meeting, Buffett reiterated his stance on tariffs.
“The main thing is that trade should not be a weapon,” he insisted.
“The United States has become an incredibly important country starting from nothing 250 years ago – there’s never been anything like it. And it’s a big mistake when you have 7.5 billion people who don’t like you very well and you have 300 million people crowing about how well they’ve done.”
Years back, Buffett proposed an alternative to tariffs: “import certificates.”
The U.S. could issue import certificates to U.S. exporters, with each certificate having a specific value attached to it. Exporters could then sell those certificates to entities looking to import goods to the U.S.
This concept could lead to a more balanced trade system. But it’s questionable whether it’s an idea the current administration would consider.
For this reason, consumers will still need to brace for the impact of tariffs — and hope for the best.Â