Trump Tariffs Threaten Social Security Benefits for Millions

Increased tariffs imposed by the former administration could inadvertently elevate the cost of living, potentially leading to higher Social Security cost-of-living adjustments (COLAs). This could strain the Social Security trust fund, affecting benefits for countless Americans.

COLA Calculation Explained

The COLA is adjusted yearly to account for inflation’s impact. This adjustment helps sustain beneficiaries’ buying power. The COLA calculation uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data from the Bureau of Labor Statistics, specifically comparing the third-quarter figures.

Kathleen Romig of the Center on Budget and Policy Priorities highlighted a potential concern, saying, “Higher inflation leads to higher Social Security cost-of-living adjustments (COLAs), which increase the program’s costs and reduce trust fund solvency. And if they end up slowing the economy, that will also reduce trust fund solvency.”

Tariffs and Inflation Concerns

The tariffs imposed by former President **Donald Trump** on imported goods may trigger inflation. Experts anticipate that the 2026 COLA could be higher than current estimates because of these tariffs. The Senior Citizens League estimated the 2026 COLA to be 2.5% based on May’s CPI-W data, however, if inflation surges due to tariffs, the COLA may increase.

Aichi Amemiya, a Nomura senior economist, commented in a research note, “We believe the limited impact from tariffs in May is a reflection of pre-tariff stockpiling, as well as a lagged pass-through of tariffs into import prices. We maintain our view that the impact of tariffs will likely materialize in the coming months.”

Joseph Brusuelas, chief economist at RSM, noted higher prices for imported items like canned fruits, vegetables, coffee, and appliances. Data from the Bureau of Economic Analysis shows that the Consumer Price Index for all urban consumers increased by 3.3% in May 2024. (Source: BLS 2024)

Tariff Details

The tariffs imposed on imports have varied. Tariffs on China are currently at 55%, while those on Vietnam could reach 25%. These rates, though lower than initially imposed, are historically high in modern times. Romig also observed that the Trump administration implemented a “chaotic and haphazard tariff scheme” involving over 70 countries and diverse products.

The tariffs’ impact remains uncertain, and it is too early to know if they will substantially impact the COLA. The CPI-W has been on a slight decline, beginning at 3% in January, and reaching 2.2% in May. The 2026 COLA will be officially announced in October.