Can I Afford to Take a Sabbatical?
Carrie Sax, CFA, CFP®, shares how to evaluate the cost of a sabbatical and financial factors to consider before stepping away from work.
Brian Waldner, CFA®, CFP®
Brian Waldner, CFA®, CFP®
When you hear about tariffs in the news, it might seem like an abstract economic policy that happens far away from your everyday life. In reality, tariffs have a direct impact on all of us, often hitting the wallets of lower-paid workers and small businesses the hardest.
It’s critical to understand how tariffs work and who pays for them.
Let’s break down what tariffs are, how they work, and why they matter to you.
Tariffs are essentially taxes that the government charges on goods coming into the country. For example, if the U.S. imposes a 25% tariff on imported steel, a shipment worth $100,000 will cost the importer $125,000 after the tariff. This extra $25,000 doesn’t go to the seller or the importer—it goes straight to the U.S. government.
While the U.S. company (importer) writes the check to the government, it’s consumers and small businesses that ultimately foot the bill.
Let’s break it down:
Tariffs create a domino effect that ripples through the economy. Here’s how:
Large companies may have the resources to adjust to tariffs—they can move production overseas, renegotiate contracts, or pass on costs without losing much business. Small businesses, however, don’t have those options.
For instance, a small bike shop that imports bikes might suddenly find that their inventory costs 10% more due to tariffs. If they raise prices, they risk losing customers to larger competitors or big-box retailers. If they don’t, they might operate at a loss, which isn’t sustainable.
Consumers face similar challenges. For families already stretching their dollars, even small price increases on essentials like food or household goods can have an outsized impact.
To be fair, tariffs aren’t all bad. They can protect certain industries, create jobs in some sectors, and even help negotiate fairer trade deals. However, these benefits often come at a cost—and that cost disproportionately affects consumers and small businesses.
Next time you hear about tariffs in the news, think about how they might affect your wallet. Are the prices of goods you buy going up? Are local businesses struggling to compete? Understanding the real-world impact of tariffs can help you make sense of how government policies connect to your everyday life.
Tariffs may start as taxes on imports, paid by the companies that import the parts and goods, but their ripple effects are felt in every corner of the economy, especially by those who can least afford them.
To learn more or to connect with an EP Wealth Advisor, click here.
DISCLOSURES:
Carrie Sax, CFA, CFP®, shares how to evaluate the cost of a sabbatical and financial factors to consider before stepping away from work.
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