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President Donald Trump announced worldwide tariffs on April 2. Though many are now paused for 90 days, it’s safe to say the economy has been on a roller coaster. 

Investors panicked, which sent stock markets tumbling record amounts from New York to Hong Kong. Other indicators like oil and Bitcoin prices also showed volatility, while Wall Street hung on the President’s every word for signs of what could come next. Impacted countries either retaliated with tariffs of their own or tried to start negotiating deals. 

However, The White House sharply pivoted on Wednesday and rolled back all new tariffs to a 10% base rate right after they took effect. China remained the exception, with Trump increasing the total rate on its imports again from 104% to 125%, the steepest of any rate he has imposed. 

Through the turmoil, the Trump administration has projected confidence that no recession looms. Economists, on the other hand, are not so convinced and worry that consumers will suffer the consequences of a drawn out trade war. 

The future may be murky, but preparing for whatever lies ahead does not have to wait. Here are a few steps you can take today to be ready if these ever-changing trade policies do end up fueling any kind of economic downturn. 

What is a recession?

The term is often thrown around and is somewhat of a bogeyman, but what does it actually mean? 

There are no hard and fast rules for defining a recession, but one common shorthand describes it as a declining gross domestic product (GDP) for two fiscal quarters in a row. 

The National Bureau of Economic Research, which tracks economic cycles of growth and decline, uses the more vague description of significantly declining economic activity across multiple sectors and for multiple months, per its website.

How to prepare

Whether an official recession emerges this year or not, reprioritizing your personal finances will help you get through this moment stronger. 

The classic advice to build financial resilience still holds true: set aside a portion of your income for emergencies, typically enough to cover expenses for a few months; think hard about what extra spending feels worth it and cut back on the rest; and look for ways to bring in extra income such as picking up work shifts, starting a side hustle, or selling belongings you don’t use anymore. Check out Investopedia’s guide for more tips on starting a side hustle. 

Protecting your credit score is also extra important during hard times, especially if you are applying for a mortgage or other kind of loan. To keep your score up, make sure you pay bills on time, keep your oldest credit card open, and knock down any debts with high interest.

It may not be a good time to tie up savings in the stock market. But if you already have money invested, now is not the time to pull out, even if you lose some ground. As scary as recessions are, a rebound has never failed to follow eventually, and you’ll want to have kept your foothold when that comes. In the meantime, diversifying which types of assets and industries you’re invested in can give you an extra safety net.

What should stay in your budget

Some essentials are obvious. Others are not valued as high as they should be.

Three of those underappreciated expenses that are worth every penny — especially if you have kids — are joy, enrichment, and health, according to Shanina Carmichael, writing for Black Girl Times. 

Making space to get out of the house and have some fun are all the more important during hard times. Museums, water parks, and hiking trails are good options, and many have discounted days or hours, Carmichael explains. 

Summer camps are another valuable resource for giving kids social connection and exposure to new things, while giving parents a chance to rest. Camps can be pricey, but some offer scholarships, and many schools, libraries, and community centers offer free options. Families can also apply for childcare subsidies in some states, according to Carmichael.  

Last but not least is your health. When bills and groceries are through the roof, it can be easy to justify skimping on a healthy diet and preventative health care. But knowing you are taking care of your body and your family’s health is a big peace of mind during financial lows. 

Carmichael recommends putting pride aside and checking eligibility for government resources like Medicaid or the Supplemental Nutrition Assistance Program. Many communities offer more ways to get support as well, such as growing food in local gardens and mutual aid networks.  

Crash course in global trade

Understanding what caused these tariffs and how they impact Americans can also help you prepare. 

Two of Trump’s overarching economic goals are to bring manufacturing back to the U.S. and to even out or flip trade deficits. That means he wants the U.S. to produce and sell the same amount or more than it buys from other countries.

The primary strategy he is taking to achieve these aims is to charge extra fees, called tariffs, on imports from other parts of the world. Yet the result, at least in the short term, is that those goods will become more expensive at every step of the supply chain all the way to the grocery shelves or the pharmacy. 

This kind of inflation is the main worry facing consumers, as high prices on essential goods make getting by all the more difficult, with or without an official recession. 

Lawrence Summers, an economist and former treasury secretary of the Clinton administration, argues that Trump is spinning contradictory tales with this trade policy, according to The Associated Press. 

That’s because stirring up enough dust with tariffs to bring businesses back to U.S. soil will take years, and some tariffs could even be permanent. Yet Trump quickly expressed openness to negotiate deals and plans for talks with several nations, Summers reasoned.

“The president can’t have it both ways,” he told AP. 

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