Study Finds Most Paycheck-to-Paycheck Households Expect Tariffs to Worsen Financial Strain

The latest round of tariff threats tied to global trade tensions, lobbed this weekend over Greenland, arrives at a moment when millions of U.S. households are already navigating thin financial margins, limited savings and heightened sensitivity to price changes.

For families living paycheck to paycheck (about two-thirds of consumers), even modest cost increases can ripple quickly through household budgets. That backdrop helps explain why tariffs were already on consumers’ radar as the new year began, and ahead of the latest uncertainty that arrived this week. Rather than viewing tariffs as abstract geopolitical tools, many households appear to be weighing their potential effects in personal terms.

New data from PYMNTS Intelligence show that concern is not confined to any single segment of the paycheck-to-paycheck population. Instead, anxiety about tariffs is broadly shared, reflecting how exposed household finances remain after inflation (which is still rising, though at a moderating pace), uneven wage growth and persistent cost pressures.

How PYMNTS Intelligence Measures Paycheck-to-Paycheck Living

The findings draw on PYMNTS Intelligence’s proprietary paycheck-to-paycheck framework, which goes beyond income alone to assess financial vulnerability.

Consumers who report living paycheck to paycheck are classified as by need or choice based on a weighted model that considers household composition, debt levels, number of dependents, spending behavior and other structural factors. The goal is to distinguish those living paycheck to paycheck largely because of constrained circumstances from those doing so more by choice, often due to discretionary spending decisions.

This distinction matters because it sheds light on how much flexibility households have to adjust when prices rise. Some consumers can cut back or shift spending categories. Others have far fewer levers to pull. The data are based on 2,465 complete responses collected between Dec. 15 and Dec. 31.

Tariffs Viewed as a Financial Negative Across the Board

Across every paycheck-to-paycheck group, expectations skew heavily toward tariffs harming household finances, as can be seen in the chart below.

When combining consumers who expect tariffs to be completely negative with those who anticipate at least some negative impact, the shares are strikingly high. More than 8 in 10 households living paycheck to paycheck out of necessity fall into this category. Among those living paycheck to paycheck by choice, nearly three-quarters share that view.

Even when isolating the most pessimistic responses, the pattern holds. And at a high level, at least 40% of consumers in every paycheck-to-paycheck group expect tariffs to have a mostly or completely negative effect on their personal and household finances. Those living paycheck to paycheck out of necessity are modestly more likely than their choice-based counterparts to see tariffs as entirely harmful.

What stands out is not just the difference between groups, but the consistency of concern across them.

Limited Optimism Signals Uneven Financial Cushioning

The share of paycheck-to-paycheck consumers who expect tariffs to help their finances is relatively small, and it drops sharply among those living paycheck to paycheck out of necessity.

Households in the necessity group are roughly one-third less likely to anticipate positive effects from tariffs than those in the choice group.

This gap likely reflects differences in financial flexibility. Consumers with greater discretion over spending may feel better positioned to absorb higher prices, substitute products or delay purchases. Those whose budgets are dominated by essentials such as food, housing and utilities have fewer options.

For them, tariffs are less an abstract policy lever and more a direct threat to affordability.

What This Means for the P2P Economy

Looking ahead, these perceptions matter because expectations often shape behavior. Those trends are also evident in the 62% of consumers who said they were reining in at least some of their spending, per separate PYMNTS Intelligence research. One in five of consumers surveyed said they’d borrowed money from family or friends.

Thus far, 50% of consumers report daily living expenses as a current challenge, with 84% citing groceries and household essentials as the source. Additionally, 42% report the economic environment as a current challenge, with 87% of them citing rising prices on everyday items as the source.

If an even larger share of paycheck-to-paycheck households anticipates financial harm, they may respond preemptively by tightening budgets, delaying discretionary purchases or increasing reliance on short-term liquidity tools such as card installments or buy now, pay later options.

Households may prioritize cash-flow management over long-term planning, favor predictable pricing and seek greater control over when and how bills are paid. Demand for flexible payment options, budgeting tools and short-term liquidity solutions would likely rise as families try to buffer themselves against uncertainty.

For banks and for FinTechs, the data underscore the importance of products that help consumers manage volatility. Transparency, flexibility and real-time visibility into balances and obligations may become even more critical if tariff-driven price pressures materialize more markedly.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.