Americans increasingly worried about new tariffs, worsening inflation

Consumers with head in hands worrying about new tariffs and higher inflation. Americans-are-increasingly-worried-about-high-inflation-and-new-tariffs.

By Ayo Mseka

Americans are increasingly worried about high inflation and new tariffs increasing their cost of living, according to the 2025 Q1 Quarterly Market Perceptions Study from Allianz Life Insurance Company of North America. A new set of tariffs were recently announced by
President Trump.

The survey said that most Americans are expecting inflation to get worse, with 71% saying they expect it will get worse over the next 12 months. This is up from 60% at the end of last year. And three in four are now worrying that new tariffs will increase their cost-of-living expenses.

Tariffs add 'tax' for the consumer

“Tariffs add to the total cost of a good for end consumers with a tax,” said Kelly LaVigne, VP of consumer insights, Allianz Life Insurance Company of North America, as he explained why so many consumers are worried about them. “So, people are worried about the goods they are purchasing costing more.”

Many consumers are also worried about how continued inflation will affect their financial future, according to the survey. About 73% are concerned that the rising cost of living will affect their retirement plans. In the short term, 79% worry about rising inflation continuing to have a negative impact on the purchasing power of their income in the next six months.

With that, 67% are concerned that their short-term investments (such as bonds and money market funds) do not have high enough returns to combat ongoing inflation.

“While the pain of inflation is hurting many Americans right now, the effect of inflation on your cost of living just compounds over time,” said LaVigne. “That means inflation will continue to erode your purchasing power, unless you have a long-term strategy to address it. When you retire, it is important to plan for inflation so that your standard of living does not decrease as the cost-of-living increases.”

Fewer are comfortable investing in the market

Concerns about a market crash have also increased in the first part of the year, the survey said. For example, more than half of survey respondents are worried that another big market crash is on the horizon. At the same time, fewer Americans feel comfortable with investing in the market. Just 26% said they are comfortable with current market conditions and are ready to invest now, down from 31% in Q4 2024.

Helping clients stay on course

As financial professionals work with their clients, what can they do to help them continue investing in the market? Financial professionals need to keep their clients on course, LaVigne said. “The most critical role of a financial professional is to protect clients from making financial decisions out of emotion or fear,” he said. "A written and detailed financial plan that incorporates strategies to address risks like inflation is a great asset.”

“By revisiting the plan with clients,” LaVigne added, “you can remind them of how they have set themselves up to stay on track toward their financial goals. It’s important to remind clients that taking part in the market is one way to maintain purchasing power during times of inflation.

A certain way to lose purchasing power is to keep money in cash. While clients may be reluctant to invest because of market volatility, a financial professional can introduce products into the strategy that can offer protection while also participating in the market, like buffered exchange traded funds (ETFs), fixed index annuities, or registered index-linked annuities.”

Worries about the market are leading more Americans to connect with a financial professional. According to the survey, 59% of respondents said that they recently have or plan to reach out to their financial professional because of concerns about recent market conditions. This is up from 51% in Q4 2024.

Allianz Life conducted an online survey, the 2025 Q1 Quarterly Market Perceptions Study, in February 2025, with a nationally representative sample of 1,004 respondents age 18+.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].