It is important for US retirees to be updated with the new President Donald Trump’s recent tariff-related issues. Though news mostly have carried on about trade wars and stock market instability, a small yet fundamental connection has gone undiscovered — the Social Security cost-of-living adjustment (COLA) that people ignoring the tariffs will have on their Social Security benefits.
The COLA is a part of the calculation of the adjustment used to provide retirees with ever-increasing monetary benefits that will sustain their lifestyles based on inflation. Economists have pointed out that tariffs could have a big impact on prices in the future.
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The issue is not of different opinion: Can tariffs be so powerful as to increase the Social Security check in 2026?
Let’s visualize the way it could take place.
What Is the Social Security COLA?
Every year, the Social Security Administration (SSA) raises the payment that it makes to beneficiaries by the level of inflation. This is the Cost of Living Adjustment (COLA).
The inflation index that the SSA uses is called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This figure indicates the movement of prices of items such as food, gasoline, and rent.
The computation is simply the CPI-W of the three months of July, August, and September (Q3) of the previous year being compared to those same months in the current year. If there is an increase, so are the benefits. If not, the benefits will remain as they are.
For 2025, the retirees’ COLA was 2.5%. A 2.3% rise in the COLA for 2026 is expected to be confirmed by The Senior Citizens League (this is a preliminary estimate only).
How Tariffs Can Affect Prices
While some believe that President Trump’s tariffs are primarily intended to save American jobs, it is possible that they may lead to higher prices for many imported products. The reason is that the duty is charged to importers, who in turn pass it to the consumers, and it is not the foreign governments who pay it.
If enterprises opt to transfer these expenses to end-users, there is a possibility that the prices of most products, i.e., electronics, clothing, household goods will go up. This is a crucial part of higher inflation.
If we go from recent history, it’s quite possible that a spike in inflation in quarter three of 2025 will trigger a rise in the CPI-W. With this in effect, the COLA in 2026 will go up thus bigger monthly Social Security payments to be given.
Per a CNBC report, the experts who see tariffs kept in place also see inflation surge by a figure of up to 2 percent. Conversely, EY’s chief economist Gregory Daco thinks that the rise will be slightly lower – at 1%.
Making People Happy with Higher Checks Is Tough — But It’s Not Just an Empty Promise
A higher COLA may seem to be a real success for retirees. However, the situation is more complicated than that.
First of all, the upswing in benefits could be insufficient to counterbalance the new expenditures. Seniors already have undergone the struggle of coping with high prices in the healthcare sector, which rises much faster than the overall inflation rate.
Secondly, the faster the cost-of-living adjustments (COLAs) grow, the quicker it becomes apparent that the trust fund of Social Security is being used up. The propensity of this happening is due to the fact that the program is headed for funding short falls in the next decade.
In an event of rapid inflation accompanied by a sharp increase in benefits, the reserve fund may deplete faster than those responsible for its renovating had expected. This may lead them to choose between cutting benefits or raising taxes later on. Because inflation increases the costs of many items
Are There Scenarios Left to Unfold?
Even now, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and thus the cost of living adjustments might not soar in the current year due to several reasons.
- As before, the president might consider suspending or reducing tariffs.
- The courts could decide to stop the tariffs. A lawsuit arguing that the tariffs are beyond the powers of the administration is currently pending.
- Tariffs may even damage the national economy to the point of a recession, which, particularly, is the fall in inflation so to speak.
Given that the COLA is not only possible but probable, it is unlikely.
Actions Retirees Need To Take Today
Supposing you are at retirement age and have already started claiming your Social Security benefits, then it’s totally necessary for you to keep yourself informed on what’s happening economically. When prices are going up and at the same time, the amount of benefits is uncertain or not guaranteed, it becomes really hard to do your budgeting.
You can make a prediction of COLA come October 2026 using the SSA website. October 2025 is the deadline by which the official COLA for the year 2026 will be published, and this will be based on the data on inflation in the third quarter.
Be alert for the time being. The positive side of more COLA is that you can have a feeling that it all goes well with it, but in real sense, you are in turn giving more money at the grocery store, gas station, and pharmacy at the same time.
President Trump’s choices for tariffs could potentially lead to even more than the readjustment of the stock market. They might as well result in a reduction of next year’s Social Security benefits for the retirees.
No one has the exact number of inflation, yet we can affirm that the pensioners are once more in the establishment of a bigger economic narrative.
Don’t forget to check our site for Social Security and retiree-friendly financial news updates.
