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 stock market correction 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.
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.
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.
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. And if other assets get clobbered, I will be buying them too.
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%.
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?
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Great post Sam! My family is debt free with a net worth of about $5M and we’ve been dirt poor in our early marriage. We know how to hunker down. We drive old cars, own about $1.5M in physical real estate (primary, rental, and land) with zero mortgages. We’re invested in stocks (30%) and private equity holdings from the sale of our company ($1M), plus various other investments including holdings in Fundrise per you recommendation. We’re schooled in cooking food from scratch ingredients, raising chickens, and guerilla gardening. The ironic part is I’m in tech sales and showing people how to leverage AI in their operations. lol
While I agree with you that these types of broad tariffs generally hurt the lower middle (and even upper middle) classes and help the wealthy, the appreciation of luxury goods and building materials pales in comparison to the stock market opportunities that ridiculousness like this creates. I wonder why this admin would want that…..?
They could be short the market. Hard to say until they disclose.
All lights front loading the bad stuff so that the rest of the year gets easier with tax cuts and do regulation to help boost the economy, along with fed rate cuts.
I’m feeling good about my mostly Swiss watch collection!
I feel bad for the middle class. But half the country voted for Trump, so it is what it is.
Hopefully we continue to get the 10 year bond yield down and the cost of our debt interest payments down.
Good to be more physically responsible, long-term.
Not to burst your bubble but your Range Rover is probably worth $10K (trade) to $14K (private party). You’re not likely to see much appreciation to those figures due to the tariffs. You’re likely also reaching the point where you’ll need a timing belt change (if not done so already) and that will run you about $7K. And that’s current pricing. Tariffs will soon effect the cost of replacement parts as well. So you’re likely looking at near term maintenance costs of 50% – 70% of the current market value. And that’s assuming that nothing else needs attention. As you’ve experienced, there are no cheap repairs on these vehicles. I know, I’ve owned several.
It’s one of the reasons I’ve started to migrate towards electric vehicles. In addition to the low operating costs, maintenance is a fraction of what I’ve paid for internal combustion engines.
Cars may be an area where consumers could navigate to more American made/content items. But as you’re research has shown the analysis can be tricky. And to the extent that manufacturers are absorbing the cost of tariffs on some cars they may spread the losses across other models. In short, if we don’t see a change in current policy, I would expect prices to go up across the board regardless of model or where the vehicle is manufactured, assembled, or its content comes from. That’s why auto manufacturers, foreign and domestic, have been very vocal about the impact of this policy.
No worries actually. I got quotes for $25,000 -$33,000 due to the low mileage and maintenance work done already. Not bad value actually for the buyer. I would definitely buy my car for $10,000 if I could find it.
The Range Rover Sport 2015 has a timing chain, not a timing belt. They last between 150,000 to 250,000 miles with regular maintenance, and my car only has 61,500 miles. So at the rate I’m driving, I might need to change it in 15 to 25 years. But I’m pretty certain I’ll have a different car before then.
I hope the dealer didn’t trick you into thinking you had to change your timing chain for $7K. If they did, I would demand a refund ASAP!
If you can get $25K I’d jump at it as KBB is much less (had to guess a bit on the miles, condition, and whether or not it was higher trim). JLR will typically recommend a new timing chain at 75K – 100K miles. I usually sell mine before they get to that range. Theoretically you could go to 150K miles but getting there is a bit of a ticking time bomb at that point. The vehicles tend to go south as you get closer to 100K miles. I sold my last one after getting a routine maintenance estimate north of $5K for air ride suspension items. Stuff just wears out prematurely on these.
If you haven’t seen it check out Doug Demuro’s video on his Range Rover experience. He bought a used model through CarMax, took out their extended warranty, and in three short years it paid out twice the cost. The video launched his career and caused CarMax to change their policy on extended warranties. It also brought a lot of attention to the trial and tribulations of used Range Rovers.
https://www.youtube.com/watch?v=7Czt0N9jd1s
Did you really pay $7000 to change a timing belt when the Range Rover has a timing chain?
I have 165,000 miles on my 2011 Range Rover sport and the dealer says my timing chain is fine and should last the life of the car, 200,000+ miles.
I would seriously be careful with your existing auto mechanic if you did spend that type of money on something you shouldn’t.
I haven’t had to do it but you can find plenty who have on the forums. And it’s an engine out endeavor on the Supercharged engines with I believe about 18+ hours of labor. I’ve never owned one beyond 70K miles for that reason.
Was the pay wall post an April fools joke? I kept looking for something to that affect but it was April 2nd.
Can you do a post on how you have set those financial accounts up for your kids? I have been wanting to do this for a long time. Maybe you have already done one and I missed it?
Hi Bryan, it was. Check out the end of the post.
I’d just call your online broker to set it up. But you definitely have to pay attention to details and be thorough.
another great article. Liberation day just made my audi 2024 sports convertible more valuable on resale than i purchased it for! i also put 60k to work in the market today. we have had a lot of bad presidential administrations but each time the market recovered and was higher, even in spite of them.
Oh man what a brutal day in the markets. It’s very hard to look at the short term stock market charts–nauseating really. So I’m trying to beat my anxiety with a stick and zoom out to the 5+ year charts.
My eyes almost popped out of my head looking at that tariff graph though. Wow. I am still having trouble processing what’s actually happening. I feel like I’m in shock. I’m going to re-read the survival tips in your stagflation article right now to try and calm my nerves.
It’s sad because it didn’t have to be this way. Hopefully it’s just short-term pain for long-term gain. But the short term could really devastate millions of people as they lose their jobs and their livelihoods.
Next month I am moving back to the USA after 2 years, and to a place where a car is needed. However, I saw this tariff uncertainty coming and last month I made a special trip to the USA to buy a new-to-me used car (2021 Honda CRV with 60,000 miles) within my 10% of my annual income. I feel happy that I beat the chaos that will likely ensue in the car market! I’m using my extra income to pay down some high-interest debt I accumulated by purchasing a condo in Mexico with unsecured debt. I’m not sure my property values in Mexico are going up though because of this tariff war!! So sad that many in Mexico will probably lose jobs because of this. Things were going along well, these large shocks will only isolate America and make other countries not trust us.
Welcome back! Thinking of the Honda CRV too. The new one is great.
It’s hard to say what your Mexican property value will do. You’re in America, demand for real estate is going up because mortgage rates are going down. Meanwhile, the cost to build homes is increasing, so the value of homes is intrinsically increasing as well.
So the same could happen to your Mexican property. When the stock market is melting down, a real estate tends to do very well and outperform.
So no paywall? This is liberation day for the samurai army!
Yeah, I don’t want to contribute to inflation, so free reading continues!
Thank you for the reality check of what’s going on, and for sharing your screenshot buying VTI. I don’t have the same cash reserve, but I’ve been following the same strategy. It’ll either turn around, or it won’t, but it feels like prices are too attractive to not dip into the market.
Valuations will surely drop though based on projected demand. A recession feels inevitable. It wasn’t but now is. So who knows what any of this stuff is actually worth. Until we do, I’d expect volatility to remain sky high.
In the meantime, loving my Grand Highlander. Wish I had more conviction to buy VTI on a day like today or tomorrow, but damn, I don’t trust the guys in charge. Yes men and the old bankrupter in chief. You can’t lie to the world that trade deficits that only reflect goods and leave out services (30% of US exports are services!) are the same as tariffs and expect anyone to take you seriously. I want to think positively because the alternative is so awful. I’ve been trying since November, but it’s been a rough road. I hope you’re right Sam that there’s a way out of this.
Tough road indeed. Hopefully we bought them by 5000 on the S&P 500. That’s what I wrote in my post on how I’d invest $250,000.
But I am loving the uptick in demand for real estate and the lower mortgage rates. Half my net worth is in real estate so I have conflicted emotions.