Trump’s “Liberation Day” may be the first step in America’s exit from its role as the world’s economic anchor and trusted trade ally. That’s according to Canadian Prime Minister Mark Carney, who didn’t hold back in a press conference shortly after reciprocal tariffs on U.S. autos were announced.
“The system of global trade anchored on the United States … is over,” Carney said during the recent announcement. “The 80-year period when the United States embraced the mantle of global economic leadership … is over. While this is a tragedy, it is also the new reality.”
Don’t miss
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 5 of the easiest ways you can catch up (and fast)
- You’re probably already overpaying for this 1 ‘must-have’ expense — and thanks to Trump’s tariffs, your monthly bill could soar even higher. Here’s how 2 minutes can protect your wallet right now
- Gain potential quarterly income through this $1B private real estate fund — even if you’re not a millionaire. Here’s how to get started with as little as $10
As the former head of both the Bank of Canada and the Bank of England, and an Oxford-Harvard trained economist, Carney certainly has the experience needed to help Canada navigate this new reality. But his stern warning is rippling far beyond Canadian borders.
According to the BBC, world leaders, including EU Commission Chief Ursula von der Leyen and Japan’s Prime Minister Shigeru Ishiba, say the ongoing trade war will have “dire” consequences for millions of people across the world and undermine the global trading system.
Here’s why the chorus of concern continues to expand and how you can prepare for what’s to come.
The world’s largest buyer
The U.S. isn’t just the largest economy in the world, it’s also the largest consumer of goods and services.
In 2023 alone, the U.S. imported goods worth $3.17 trillion in aggregate, according to Visual Capitalist’s coverage of World Trade Organization data. China, the second-largest economy in the world, is a net exporter, according to the Financial Times.
As a result, the global economy heavily relies on American consumption, and any trade barriers, such as tariffs or embargoes, could have severe consequences for nearly every country.
This is why Carney is warning that the Trump tariff policy could “rupture the global economy.”
There are plenty of signals validating this thesis. Global stock markets have shed $9.5 trillion in total value since early April, according to The Street, while JPMorgan’s probability forecast for a U.S. recession this year sits at 60%.
However, this isn’t the first time the world has faced an economic calamity, and there are ways you can prepare your finances for a tough road ahead.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Safe havens
There’s no way to predict what the economy could look like a few months from now. But there are ways to protect your wealth and household budget right away.
Recessions usually coincide with a sharp surge in layoffs and unemployment, so building up a larger-than-usual emergency fund could bolster your family’s finances if you happen to lose income.
Cutting back on discretionary spending and adding a margin-of-safety to your annual budget could help you mitigate the added costs of these import tariffs.
Estimates by the Yale University Budget Lab conducted after the “Liberation Day” announcement suggest that the typical American household could see an average purchasing power loss of $4,700 in 2024 dollars due to the trade war.
For your investments, you could consider a safe haven asset such as gold to protect some of your wealth.
Each ounce of the yellow metal has increased in price by more than 20% over the past six months, and some investors are retreating to it as a safe haven during market volatility.
What to read next
- Don’t have the cash to pay Uncle Sam in 2025? You may already be eligible for a ‘streamlined’ handshake with the IRS — here’s how it works and how it can potentially save you thousands
- Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
- Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
