Reciprocal Tariffs Actually Make Wealthy Americans Even Richer

Reciprocal tariffs will drive up the cost of most goods, making everyday life more expensive for American households. According to Fitch Ratings, the U.S. tariff rate on all imports has jumped from 2.5% in 2024 to around 22% today. Some research firms estimate the percentage is closer to 30%. As a result, more Americans may start seeking domestically made goods to save money.

While another bear market is disappointing, most of us expected one to happen given the lofty valuations. We’ve diversified into hard assets like real estate, which historically holds or even gains value during economic uncertainty. But no matter how much you plan and diversify, making money in a downturn is always a challenge.

However, there’s a short-term silver lining to tariffs: Wealthy Americans and big spenders just got an unexpected boost in the value of their foreign assets. The argument is a little like grasping for straws, given the wealthy have lost the most amount of wealth in the stock market. But when there's gloom and doom, any positive perspective is nice!

Let me explain, starting with my own experience, followed by other key examples.

Wealthy Americans Benefit The Most From Higher Tariffs

If you follow my 1/10th Rule for car buying, then owning a European car likely means you have a high income. With the average cost of BMWs and Mercedes-Benz vehicles running about $72,000, you’d need to earn at least $720,000 a year to adhere to the rule.

Further, if you follow my House-to-Car Ratio for financial freedom, which suggests your home should be worth at least 30 times the cost of your car, then you’ve likely built a sizable net worth. With this ratio, owning a $72,000 European car implies your house is worth at least $2.16 million— a little over five times the U.S. median home price.

Of course, only a minority of people follow these financial guidelines, even those who are personal finance enthusiasts. But I like to give people the benefit of the doubt: if you own a European car, you likely have a higher net worth than the average person.

Now thanks to Trump's new 25% auto tariffs, you just found yourself some free money!

My Range Rover Just Increased In Value By $6,000+

After spending another $1,150 on repairs for my 2015 Range Rover Sport in early March 2025—this time due to leaky hoses and a faulty heater manifold—I felt a little conflicted. Over the past three years, I’d already spent about $4,500 on various fixes after it hit 50,000 miles. Do I buy a new car or keep mine for five more years?

Then I had a realization: my 9.5-year-old car may have just increased in value by $6,000 – $10,000 thanks to the newly implemented automobile tariffs on March 27, 2025! It was enough to cover all my repairs and then some.

Now European car dealers will hike up both their new and used car inventory and pass the tariffs onto consumers. In turn, existing European car owners will raise their prices commensurately on the private market if they plan to sell.

The goal of these tariffs is to boost American car sales, yet ironically, shares of General Motors and Ford still fell 5%–10% after the announcement. The market seems to believe that higher costs will dampen overall consumer spending, leading to weaker demand for cars across the board.

I bought my Range Rover in December 2016, long before these tariffs were on the table. Now that it’s almost a decade old, I’ve been considering a new vehicle—perhaps a Jeep Grand Cherokee to haul the family to Lake Tahoe.

The Grand Cherokee has always been a dream car of mine since I saw a rich high school classmate drive around in one. With higher foreign car prices, that option is looking even better.

Cars Made In The U.S.A. Ranked In Order Of Percentage Parts

Here's a chart (zoom in) showing various car manufacturers and models along with the percentage of their content made in the U.S. (or Canada). Unfortunately, I don’t see the Jeep Grand Cherokee anywhere on the list. Instead, the rankings are dominated by vehicles from Tesla, Honda, Toyota, and Hyundai.

This highlights an interesting point: just because a car brand is American doesn’t mean most of its parts are made in America. Conversely, a foreign brand doesn’t necessarily mean the car isn’t primarily manufactured and assembled in the U.S. I was too quick to judge with my Jeep Grand Cherokee! Darn it.

After reviewing the list of cars made in America, for my next car, I’m now considering the Toyota Grand Highlander, Honda CR-V, Honda Accord, Honda Pilot, and Kia Telluride. As for Tesla, they’ll need to update the Model 3 and Model X before I’d even consider them.

Not only do I want my next car to be predominantly made in America, I also want it to be more affordable. After all, cars are the number one personal finance killer.

More Luxury Foreign Goods Are Worth More, Benefiting the Wealthiest

It’s not just luxury European cars appreciating in value due to reciprocal tariffs, many imported luxury goods are now worth significantly more.

Think high-end Swiss watches (Rolex, Patek Philippe), German timepieces (A. Lange & Söhne), French and Italian jewelry (Cartier, Bulgari), and iconic handbags (Hermès, Louis Vuitton, Chanel).

Take the Hermès Birkin bag, for example. Previously priced between $10,000 and $40,000 in the U.S., it now costs an additional $2,000 to $8,000. And who typically owns a Birkin? Mostly affluent women—you’ll spot them strolling through Manhattan’s Upper East Side or San Francisco’s Pacific Heights.

Or consider the stainless steel Rolex Daytona. At retail, it costs $15,500, but with the 31% reciprocal tariff, its price jumps by $4,805. Meanwhile, the private market value of a stainless steel Daytona hovers around $30,000. With the tariff impact, it’s now effectively worth $9,300 more. And who collects high-end timepieces? Primarily wealthy men with extensive watch collections.

Luxury Homes Are Worth More Too

The definition of a luxury home generally starts at at least $3 million. Now, such homeowners are wealthier too thanks to the tariffs.

Let’s look at custom-built luxury homes with imported materials from Europe and Asia. Materials typically account for 40% to 60% of a luxury home’s cost, including imported stone, custom cabinetry, premium flooring, and high-end smart home technology. If 50% of a $5 million home is made up of imported materials that now cost 25% more, the home’s effective value rises by $625,000 to $5.625 million.

And who can afford a $5 million home? Based on my 30/30/3 home-buying guide, it’s typically a household earning $1.66 million a year or one with a net worth of at least $16.7 million, if using my net worth home-buying guide. I suggest limiting your primary residence to no more than 30% of your net worth.

One of the primary ways insurance companies determine a home's value is through its replacement cost—the expense required to rebuild it. So, if construction costs are rising, the value of your existing home is increasing as well.

Once again, government policies end up benefiting those at the top.

Did the Tariff Hike Help the Wrong People?

Every politician aims to help the largest number of people possible—usually the middle class. The more people you benefit, the more votes you secure. The more votes you secure the more power you can amass.

However, since European cars tend to be more expensive than the average vehicle, this 25% tariff hike has effectively benefited wealthier car owners the most.

Last year, I visited Land Rover and Mercedes-Benz dealerships out of curiosity, and I was shocked at how expensive new models had become. We’re talking $115,000–$180,000 for vehicles similar to mine, which I bought for $58,000 (pre-tax) in 2016. Brand new, my car originally cost about $74,000.

That visit convinced me that there was no way I’d buy a new luxury vehicle at those prices. Instead, I decided to keep maintaining my existing car. I figured spending $1,000 – $2,000 a year fixing my car was far cheaper than spending over $130,000 after tax on a new car.

Below is a chart that highlights how much each car manufacture's price will increase in America on average thanks to tariffs. Notice how Tata Motors, owner of Land Rover, shows the highest increase at $20,739! Hooray for my Range Rover Sport!

Land Rover also mentioned it will be suspending shipments of their Range Rovers to the U.S. indefinitely, thereby making them even more scarce, driving up the price further.

Should Have Spent A Crazy Amount Of Money On A Car

But now that the 25% foreign auto tariff is in effect, I should have splurged on a $200,000 vehicle! If I had, I could have seen its value jump by up to $50,000—while enjoying a sweet ride in the process.

Too bad my frugality made me miss out on free money. At least my car should run at least five years longer after changing many of its most important parts. Besides, my car only has about 61,500 miles on it.

Who Has The Capacity To Buy The Dip? People With Money

Alternatively, I could take the $200,000 in cash I didn't spend on a new foreign automobile and invest it. That's exactly what I'm doing, buying the stock market dip because I have the cash and cash flow. I will keep buying on the way down. And if other assets get clobbered, I will be buying them too.

The people who have the most amount of cash flow and cash will be able to take advantage of the stock market correction and buy the most. As a result, when there is an inevitable rebound, the wealthiest Americans will benefit the most.

The Government Doesn’t Need to Help Owners Of Luxury Goods

After 24% and 23% gains in the S&P 500 in 2023 and 2024, luxury foreign car and goods owners don't need extra money. Instead, the focus should be on helping Americans who aren’t heavily invested in stocks or real estate—especially those struggling to cover everyday expenses.

According to Bankrate’s 2025 survey, 59% of Americans don’t have enough savings to cover an unexpected $1,000 emergency expense. That's pretty bad, if true.

“We are essentially a paycheck-to-paycheck nation,” said Mark Hamrick, Bankrate’s senior economic analyst. “Despite low unemployment and steady growth, fewer Americans have a financial safety net for inevitable unexpected expenses. This is one of the consequences of elevated prices stemming from inflation.”

Our government should find a way to help these folks living on a tight budget, not folks with enough passive income to retire early.

A Tariff Is A Regressive Tax

Unfortunately, tariffs function as a regressive tax, disproportionately squeezing lower-income families. Since they spend a larger share of their income on essential goods, they feel the impact of rising costs far more than wealthier households.

Remember, the average saving rate in America is only around 5%. The tariffs will result in a surge of Dual Unemployment Parents (DUPs) struggling to take care of their children.

On the other hand, if you're able to save 50%–80% of your income, higher tariffs have little effect on your lifestyle or budget. The wealthier you are, the easier it is to absorb these added costs.

The Government Loves to Help the Wealthy More

This latest example of a free financial boost from the government is yet another reason to strive for top 1% wealth. While politicians claim they want to help the middle class and poor, their actions tell a different story.

Here are just a few ways the government favors the wealthy:

• Multi-millionaires can qualify for healthcare subsidies because assets aren't checked and income can be manipulated lower
• The estate tax exemption is now $13.99 million per person (2025)
• Top 1% income earners can still exclude $250,000 / $500,000 in gains from selling their primary residence
• The carried interest loophole allows private equity, venture capital, and hedge fund managers to pay a lower tax rate on a significant portion of their earnings. Instead of being taxed as ordinary income (up to 37%), their share of fund profits is taxed at the much lower long-term capital gains rate (15%-20%).
• Upcoming tax cuts for top income earners
• Upcoming deregulation to help business owners and shareholders

Why do politicians keep helping the rich get richer? Because their biggest donors are the wealthy and powerful. And let’s not forget—most politicians themselves are far wealthier than the average American. Naturally, they’ll protect their own best interests first.

So unless we start electing more everyday Americans instead of millionaires and billionaires, the government will continue designing policies that benefit the wealthy the most.

What I Plan to Do with My Newfound Wealth

If the government suddenly handed you a $6,000 check for free, how would you spend it? This is the type of question economists ask when considering economic stimulus policies.

Unfortunately for the economy, they gave me the stimulus, and here’s what I plan to do with it: nothing.

I won’t spend this $6,000 windfall on a new car—because new car prices are insane. I won’t splurge on designer clothes or shoes that clutter my closet. Nor will I upgrade our Economy seats to first class on our trip to Honolulu this summer. And we certainly won’t be eating more poké and shaved ice than we already planned.

Instead, I’ll save the $6,000 for a rainy day. Something on my 10-year-old car will inevitably break again, and I’d rather be financially prepared than caught off guard.

And because I’m saving the money rather than spending it, I won’t be doing my part to stimulate the economy. Sorry!

For government stimulus and protectionist measures to be effective, they need to be directed at the right demographic.

Saving Money Is the Default Move During Times of Uncertainty

When uncertainty looms, people naturally tighten their wallets. The larger your savings balance, the more secure you’ll feel in weathering any financial storm. Unfortunately for businesses, higher consumer savings mean lower profits. And with lower profits come declining company valuations. Bad news for investors.

Raising prices on goods and services during an economic slowdown is a risky move, one that could push the U.S. into stagflation. To adapt, I’m cutting back on all unnecessary spending until the dust settles. Frankly, I already have more than enough stuff to keep my house cluttered for a while.

While I appreciate the unexpected boost to my net worth thanks to automobile tariffs, the sting of losing magnitudes more in stock market wealth dampens the excitement. The government may succeed in slowing the relentless rise in the cost of eggs and other goods, but at what cost to the broader economy?

Finally, I'm taking advantage of this tariff-induced sell-off to invest in my kids' UTMA, Roth IRA, and 529 plan accounts. With any luck, they'll look back in 10 years and appreciate these moves!

For those of you who own foreign luxury goods, are you surprised by the sudden jump in the value of your belongings? More importantly, what do you plan to do with this newfound wealth? At the same time, how much economic pain are we willing to endure to lower the cost of goods and services and make American industries more competitive?

Suggestions To Build More Wealth

Stay on top of your finances by using Empower, a great wealth management tool I've used and trusted since 2012. Empower goes beyond basic budgeting, offering insights into investment fees and retirement planning. Best of all, it's completely free.

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