Here’s how the latest round of tariffs will hit your wallet

Personal finance

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Are you prepared to dig a little deeper into your wallet?

If not, you may have to make some choices about the products you buy and your budget, thanks to the latest round of U.S. tariffs on Chinese goods that went into effect earlier this month, as well as the duties set to hit in December.

The end result could mean higher prices on thousands of household products such as clothes, sporting goods and shoes.

“These tariffs mean a reduction in consumers’ real purchasing power,” said Katheryn Russ, a University of California, Davis, professor of economics and specialist in international trade. “So, the amount of stuff you can buy with a given amount of money, say $100, is going to be a little bit less.”

Savvy consumers may be looking to buy expensive items early before existing tariffs work their way through the supply chain and more take effect toward the end of the year.

Bethany Aronhalt

National Retail Federation

The September levies, which are 15%, apply to roughly $112 billion of Chinese imports. On Dec. 15, the administration of President Donald Trump is set to impose another round of 15% tariffs on about $160 billion of imports.

This group of tariffs is different from previous ones because they specifically target consumer goods, rather than intermediary goods that firms purchased, Russ explained.

On top of those tariffs is the expected increase of levies on previously targeted Chinese goods. President Trump has said he will increase tariffs on those to 30% from 25% on October 15. The U.S. and China are set to reopen trade talks in early October.

In total, U.S. tariffs will cost the average American household $1,000 a year, a recent study by J.P. Morgan found. However, the number could actually be higher since the study was conducted before Trump raised the September and December duties to 15% from 10%.

How hard consumers will be hit is still uncertain, said Russ.

“This is really the problem [for forecasters], in that for some of these goods, they are produced by large multinationals who can realign their supply chains,” she said. “For some, the increase will be minimal; for others, they’ll have to pass through the full cost of the tariffs.”

U.S. retailers are doing everything they can to minimize the impact on their customers, said Bethany Aronhalt, spokesperson for the National Retail Federation,  the world’s largest retail trade association.

However, “with the recent round of tariffs hitting a wide range of consumer products, including apparel, footwear, TVs and more, American shoppers are increasingly in the crosshairs,” said Aronhalt.

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“Savvy consumers may be looking to buy expensive items early before existing tariffs work their way through the supply chain and more take effect toward the end of the year.”

The December tariffs are will hit items such as cell phones, laptops and video games, as well as more clothing and footwear.

Certified financial planner Doug Boneparth, president and founder of Bone Fide Wealth in New York, thinks people shouldn’t pay much attention to the noise surrounding the escalating trade war.

“The trade war sounds scary but when it comes to our everyday lives, it’s really hard to feel the effects,” said Boneparth, a member of the CNBC Digital Financial Advisor Council.

Hong Kong, China

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“Do your best to ignore these headlines and focus on your goals,” he added. “Focus on the things you can control, like how you feel, your own health, your family and how you are doing at your job.”

That said, rising prices aren’t something you can avoid easily, Russ added.

However, consumers also readjust and optimize their spending.

“They tend to substitute away from goods when their relative prices increase,” she said. “So that’s just something that is going to happen naturally.”

CHECK OUT: 53% of people saving for retirement are making the same mistake via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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