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As President Trump imposes broad-based tariffs, U.S. companies that rely on imported products have three choices: a) take the hit to profits, b) stop buying imported goods, or c) raise prices to recoup their costs.

The question is: Which option are they choosing?

First, a basic example: A company sells $10 scarves from China for $20 in the U.S. A 30% tariff on Chinese imports means the scarf suddenly costs the company $13. The choices are:

a) The company pays the $13 and continues charging $20, making $7 in profit instead of $10.

b) To avoid tariffs, the company buys scarves from a U.S. manufacturer (perhaps at a higher price.)

c) The company pays the $13, but passes the extra $3 on to customers, selling its scarves for $23 instead of $20.

So what’s actually happening?

Economists at the New York Federal Reserve surveyed businesses in the New York-Northern New Jersey area in May. About three-quarters of those facing tariff-related cost increases offloaded at least some to consumers. And nearly a third of manufacturers and 45% of companies in service sectors said they fully passed on all tariff-related cost increases by hiking prices.

They didn’t dilly-dally, either: Over half of both manufacturers and service firms said they raised prices within a month of getting hit by tariff cost increases.

Keep in mind that the survey was conducted before tariffs on China were slashed from 145% to 30% and before a trade court ruled that many of Trump’s tariffs were illegal. (Those are still in effect pending an appeal by the Trump administration.)

That’s not to say businesses weren’t anticipating plenty of uncertainty about tariffs, and for good reason. The president has rolled back or temporarily suspended many of the tariffs pending negotiations with the countries in question (a July 9 deadline is looming). And the different types of tariffs — reciprocal, universal, country-specific, import-specific — can be difficult to make sense of.

Case-in-point: Many companies surveyed by the Fed economists couldn’t tell which tariffs they were paying and admitted to not being sure what to do in response.

Of course, some big companies are more easily able to absorb the extra cost of tariffs. And others have more leverage to raise prices based on demand for the thing they’re selling.

In fact, the Atlanta Fed surveyed companies in the Southeast in April about a hypothetical cost increase of 10% or 25% and found that most didn’t think they would be able to pass on all of it to their customers without reducing demand. On average, they anticipated they’d realistically be able to pass on about half of those price increases.

So what? Tariff-related price hikes haven’t really shown up in U.S. inflation data — at least not yet. But if tariffs continue and companies opt to pass them on, you don’t want to be unprepared.

They may not be what inflation-weary Americans were hoping for next, but building up your emergency savings, scrutinizing non-essential spending, and creating a back-up financial plan can help you weather whatever comes next.

Related Reading

The Trump Tariffs Aren’t Causing U.S. Prices to Spike. Here’s Why. (CBS News)

Trump Tariff Tracker (Atlantic Council)

Why Walmart Decided to Say It Would Raise Prices — and Risk Trump’s Fury (CNBC)

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

OTM20250702SW

This article appeared in SoFi's On the Money newsletter. Not getting it? Sign up here.

Most of us learned it early on: The first rule about money is we don’t talk about money. (Fight Club, anyone?)

It could be construed as rude if you’re telegraphing how much your shoes cost or asking someone how much they make, as Miss Manners herself will tell you.

But experts note that brushing all manner of money-talk under the rug can lead to financial issues and shame.

For example, shying away from talking about finances with your spouse or partner (think: spending habits, debt) could lead to resentment and household budgeting problems — and even contribute to breakups. And when parents don’t teach their kids about money management, they could grow up to make subpar financial decisions.

A Pew Research survey from last year suggests that talking about money significantly contributes to financial literacy: Among American adults who said they are knowledgeable about personal finances, nearly half said they learned a great deal or a fair amount about it from family and friends.

The good news: Attitudes around money-talk are changing as parents embrace financial education, more states adopt pay transparency laws, and social media influencers make it feel normal to share financial details.

Money Talks Are on the Rise

“Money used to be very taboo. But I have noticed young people these days being more open about it, which I actually see as a really good thing,” said Dr. Ashley LeBaron-Black, an Assistant Professor of Family Life at Brigham Young University.

LeBaron-Black said that childrens’ financial literacy improves when parents are open about money. The benefits extend to romantic relationships, too: “Lots of research has shown that the most high quality marriages are when spouses are fully transparent with each other about money.”

Each successive generation is more likely than the last to report discussing money with their friends, according to a January survey by MarketWatch Guides: 64% of Gen Z respondents said they talk about finances with their friends, compared to only 16% of Silent Generation respondents.

Two-thirds of parent respondents in a Fidelity Investments survey from last year said they are discussing finances with their kids. That might not have been the case for previous generations: Over half of adults said they never discussed family finances with their parents while growing up, though 82% wished they had.

“Parents being open about money with their kids is really helpful for children’s financial learning,” said LeBaron-Black.

Another factor contributing to a more open money dialogue: The rise of finance-focused influencers (aka “finfluencers”).

“I’ve been sharing my life online since I was making about $24,000 a year. I currently make $87,000, and I just got a raise,” said Sarah Wilson, who has nearly 100,000 followers on her YouTube channel, Budget Girl. “Talking about money normalizes it… And it helps us trust each other.”

Why Is It So Hard to Talk About Finances?

If money talks, then why is society so hesitant to talk about it?

For one thing, financial literacy wasn’t prioritized when many of us were growing up, so it’s easy to see why broaching financial topics might be uncomfy. You can’t speak French unless someone teaches you, n’est-ce pas?

A lack of financial education can lead to overspending, taking on too much debt, or shying away from investing because you feel you don’t know enough.

Avoiding conversations around salaries can prevent people from boosting their earnings. All of this can create unnecessary shame and trauma. Eventually, that can lead to people avoiding conversations about money entirely (or even ignoring their bank balance).

“When people feel ashamed about something, the natural human tendency is to hide it and not talk about it,” said LeBaron-Black.

People also worry about making others in their social circle uncomfortable if they’re in different financial situations.

Our society places a high — sometimes toxic — value on wealth. It’s easy to conflate net worth with self-worth, and though they are not the same thing, people might shy away from discussing money in an effort to avoid judgement — either because they fear they don’t have as much as others do, or they feel they have more.

How to Break Past the Money Taboo

Conversations about strategies for saving, investing, budgeting, and managing debt tend to boost financial literacy. And knowledge = financial empowerment.

“Money doesn’t reward silence,” said Wilson. “Keeping it taboo is only going to hold you back and keep you poor.”

Here are a few ways to responsibly open up the dialogue:

•   Find your circle: The place to be really open about money is with family, particularly with a spouse or partner and children, said LeBaron-Black. Finding a supportive online community is another option, said Wilson, though don’t assume all advice is good advice. Watching how other people discuss money can be a learning experience, too.

•   Test the waters: Wilson advises taking a light approach when first broaching a financial topic with someone. “Toss them a couple of softballs. See if they have any advice.” After all, everyone wants to feel like they can help someone.

•   Be mindful of your filter: Remember, you’re in control of how much you choose to share — and with whom. LeBaron-Black recommends keeping this in mind when talking with very young children about details you might not want everyone to know.

•   Normalize differences: You don’t have to be on the same page every time. “Money is tied to a lot of other deeper things in relationships, like trust, respect, and values,” said LeBaron-Black. Recognizing that everyone has different ideas, financial situations, and expectations can go a long way toward being able to talk about it.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

OTM2025070201

Fastest Comeback Ever

The second quarter of 2025 was a wild one. After peaking on February 19, markets began to slide because of trade policy fears. That decline accelerated into a nearly 20% correction following the April 2 “Liberation Day” tariff announcements. The sell-off was so sharp, in fact, that two of the worst 100 days in stock market history occurred in the two days post-announcement.

The Trump administration’s decision to delay tariff implementation played a big role in the market rebound, as evidenced by the nearly 10 percentage point bounce on April 9, which was one of the 100 best days in stock market history.

The de-escalation of trade tensions fueled a powerful, sentiment-driven recovery that lasted through June. The rally culminated in the S&P 500 setting a new all-time high, closing at 6,204.95 on June 30, an unthinkable accomplishment given where markets were at the start of the quarter.

To put it in perspective, the index rallied 24.5% from the April 8 bottom through quarter-end. In the history of corrections of at least 15%, that is the fastest rebound on record.

S&P 500 Year-to-Date

What Giveth Can Taketh Away

While stocks sit at all-time highs, the foundation of the recent rally is fragile. The factor that drove the sharp decline — acute fear over the future of U.S. trade policy — also enabled the powerful rebound once the immediate fear was postponed. This dynamic, however, can work in reverse.

The core risk hasn’t been eliminated, just delayed, and time is ticking on the tariff reprieves. As those pauses end and tariffs get implemented (or not), the same policy risks that previously roiled markets could be reintroduced.

Historically, periods of high economic policy uncertainty are better for forward returns but worse for trailing returns. (The reverse is generally true for periods of low uncertainty).

Economic Policy Uncertainty Affects Stock Returns

In other words, it’s not that high uncertainty itself boosts returns, but that transitioning from higher to lower uncertainty enables investors to price out worst-case scenarios (which usually boosts returns). That only can happen if uncertainty dissipates, but that’s an open question.

Risks are compounded by stretched valuations, with the S&P 500’s forward price-to-earnings ratio near cycle highs, and a deteriorating earnings outlook. Ultimately, policy uncertainty continues to drive market volatility, and it doesn’t look like it’s going anywhere for now.

Market Recap

Asset Returns

June 2025 Sector Total Returns

Macro

•   The Federal Reserve left its benchmark interest rate unchanged at a target range of 4.25%-4.50%.

•   The Fed’s Summary of Economic Projections were revised to show lower growth, higher unemployment, and higher inflation this year and next.

•   May CPI (+0.1% m/m) and PPI (+0.1% m/m) both came in below expectations, the fourth such month in a row.

•   Housing starts plunged to 1.256m in May (-9.8% m/m), the lowest level in five years.

•   Continuing jobless claims rose to 1.974m as of mid-June, the highest since November 2021.

•   Against expectations for a m/m increase of 0.3%, personal income declined 0.4% in May, the first decline since September 2021.

•   Q1 GDP growth was revised down from -0.2% to -0.5%, driven by lower consumer spending.

•   Fears of a potential disruption to oil supply in response to the conflict between Israel and Iran led to oil prices surging as much as 23.6%, before ending the month up 7.1%.

Equities

•   The S&P 500 closed at a record high of 6,205 on June 30, eclipsing its prior all-time high set on February 19.

•   The S&P 500 forward 12-month price/earnings ratio rose from 21.4x to 22.1x, representing multiple expansion of 3.5%, while forward EPS estimates rose 1.4% from $277 to $280.

•   Growth stocks beat value stocks by 2.8 percentage points, the third straight month of outperformance.

•   Defensive sectors handedly outperformed cyclicals and technology-exposed parts of the market.

Fixed Income

•   2- and 10-year Treasury yields fell 18 and 17 basis points, respectively, as weakening economic data boosted interest rate cut expectations for later in the year.

•   Investment Grade and High Yield corporate bond spreads narrowed by 5 and 24 basis points, respectively.

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Performance data quoted represents past performance. Past performance does not guarantee future results. Market returns will fluctuate, and current performance may be lower or higher than the standardized performance data quoted.