Will President Trump's Tariffs Inadvertently Boost the 2026 Social Security COLA?
President Donald Trump imposed sweeping "reciprocal" tariffs on all of the United States' largest trading partners in early April. A 90-day pause on most of these tariffs followed in mid-April to give the countries time to negotiate individual trade deals. However, Trump still set a base tariff level of 10% for everyone except China. Roughly 75 days into the pause, very few trade deals have actually been signed, and the 10% base tariffs remain (even for countries that signed deals), suggesting that some level of tariffs is here to stay as long as President Trump is in charge.Many experts argue that tariffs will result in higher levels of inflation. Coincidentally, inflation is used to calculate Social Security's annual cost-of-living-adjustment (COLA). The speculation is that the rise in inflation will result in a larger-than-expected COLA boost in 2026.Given that tariffs have not been this high for some time (and have never been this high across so many countries), we are in a bit of uncharted territory. There is some dispute over how much impact tariffs will have on inflation, and complications like a slowing economy or recession make coming up with accurate predictions even harder.Continue reading
President Donald Trump imposed sweeping "reciprocal" tariffs on all of the United States' largest trading partners in early April. A 90-day pause on most of these tariffs followed in mid-April to give the countries time to negotiate individual trade deals. However, Trump still set a base tariff level of 10% for everyone except China. Roughly 75 days into the pause, very few trade deals have actually been signed, and the 10% base tariffs remain (even for countries that signed deals), suggesting that some level of tariffs is here to stay as long as President Trump is in charge.
Many experts argue that tariffs will result in higher levels of inflation. Coincidentally, inflation is used to calculate Social Security's annual cost-of-living-adjustment (COLA). The speculation is that the rise in inflation will result in a larger-than-expected COLA boost in 2026.
Given that tariffs have not been this high for some time (and have never been this high across so many countries), we are in a bit of uncharted territory. There is some dispute over how much impact tariffs will have on inflation, and complications like a slowing economy or recession make coming up with accurate predictions even harder.
