Podcast Summary: NerdWallet’s Smart Money Podcast

Episode: Tariff Uncertainty After Supreme Court Decision and Budgeting With Sinking Funds
Date: February 26, 2026
Hosts: Sean Pyles, CFP®; Elizabeth Ayola
Featured Guest: Lourdes Casanova (Senior Lecturer, Cornell University S.C. Johnson College of Business)

Main Theme

This episode explores the aftermath of a major Supreme Court decision limiting the U.S. president’s authority to impose broad tariffs, examining what the resulting uncertainty means for American wallets and global trade. The hosts also address a listener’s question about how to budget effectively using sinking funds, sharing personal tips and experiences with segmented savings.

1. Money News Roundup: Tariff Uncertainty After Supreme Court Ruling

(Begins ~01:40)

Background

• Context: Following President Trump’s 2025 policy introducing reciprocal tariffs, the Supreme Court ruled he couldn’t use the 1977 International Emergency Economic Powers Act ("IEEPA") to authorize these sweeping levies.
• Result: Legal confusion and shifting strategies, as Trump swiftly moved to hike global tariffs to 10%, then 15%.

Interview with Lourdes Casanova (~03:15 – 15:08)

Key Discussion Points

• How Could Tariffs Go Up After a Ban?

  • Lourdes: The rapid tariff increases were technically possible due to other legal avenues, though specifics are unclear. The speed and nature of these changes created widespread confusion, especially among international partners.
    • “So there is confusion... the European Union lost trust in the system. So the new negotiation was very, very hard.” (Lourdes Casanova, 04:26)

• Global Reactions:

  • EU demanded the U.S. honor previous trade agreements; major partners like Canada and Mexico (under USMCA) felt insulated but wary, with upcoming negotiations increasing anxiety. Countries like China, India, and Brazil are recalibrating their own strategies.
    • “Canada and Mexico are under USMCA, but this agreement needs renegotiation... Both trading partners are worried.” (05:21)

• Sector Tariffs & Security Policies:

  • Existing tariffs on sectors like steel and aluminum remain in place for security reasons; the new hike stacks atop these.
  • The business environment is now extremely complex due to overlapping regulations.

• Intent and Impact of Tariffs:

  • Lourdes notes that the policy revived discussions about deindustrialization and reshoring manufacturing—an aim partly realized as the U.S. became the leading destination for greenfield manufacturing investment in 2025.
    • “One could argue that these tariffs somehow may have worked because the trend was reversed of losing manufacturing jobs.” (Lourdes, 07:05)
  • Local impacts are visible, e.g. upstate NY communities needing manufacturing jobs.

• Shift in Trade Policy:

  • The ruling signals a turning point, with the “open global world” consensus of the ’90s now in question.
    • “Tariffs have no way back. These discussions are on the table... industrial policy is back and tariffs are back.” (Lourdes, 07:56)
  • Allies such as the EU and UK are disturbed; “trust” is badly damaged.

• Market Reactions:

  • Immediate volatility: dollar and stock markets fell post-ruling, then rebounded, especially due to AI-driven optimism. Dollar weakened against the euro.
    • “I’m the panicky type, so I wanted to sell absolutely everything. This is the end of the world. And so many Americans’ 401k is dependent on the stock market.” (Lourdes, 09:50)
  • Inflation has remained moderate (2.4%).

• Investor Confidence:

  • Despite shaken trust, the U.S. stock market remains dominant and broad, still attracting investment relative to volatile emerging markets.

• Tariff Refunds & Consumer Impact:

  • Some companies (FedEx, Revlon, Costco) suing for tariff refunds, but no mechanism to pass refunds to consumers.
    • “If companies successfully secure refunds, there’s also no mechanism to pass that back to consumers, right?” (Ana, 12:44)
  • Trump floated the possibility of rebate checks, but details are unclear.

• Larger Context:

  • Global shift toward government intervention (industrial policies, nationalizations), referencing China's success with state capitalism.
    • “The success of China was for everybody, mind boggling... everybody’s thinking maybe we were wrong and maybe the government needs to have a place not only regulating but intervening...” (Lourdes, 13:20)

• Everyday Consumer Impact:

  • Tariffs have effectively increased household costs, but not as much as feared. A Harvard study cited additional costs of ~$1000 per person.
    • “This Harvard study says $1,000, we all have paid $1,000 more. If we look at inflation ... 2.4%.” (Lourdes, 14:01)
  • Uncertainty will continue to affect prices, outlook, and policies.

2. Listener Q&A: Budgeting With Sinking Funds

(Begins ~17:58)

Listener Question

John asks: “What is a good percentage of my income to put toward sinking funds after I’m investing 15% into my 401k?”

What Is a Sinking Fund? (~18:14)

• Definition: A sinking fund (or savings bucket) is a dedicated account for each savings goal (e.g., new car, vacation, insurance premiums).

• Benefits:

  • Increased organization
  • Motivation by visualizing progress per goal
  • Avoids the “nebulous wad of cash” problem

• Debate About Mental Accounting:

  • Sean: “A lot of personal finance is setting up little tricks for yourself ... even if it’s just mental accounting.”
    • (19:23)

• Bank Setup:

  • Many banks let you label sub-accounts for easy tracking.

Notable Quote

“For people who struggle with organization or ... want their financial goals to be more visible, sinking funds can be helpful.”
— Elizabeth Ayola (19:42)

How to Set Up & Manage Sinking Funds

• Where to Stash?
  • High-yield savings accounts ideal for short- or medium-term goals
  • If your time horizon is 5+ years, consider investing (22:00)
  • Direct automated deposits are key to consistency (Sean, 21:35)

Notable Quote

“At certain points in my life I’ve had around 10 different accounts and people say that is bananas.”
— Sean Pyles (21:19)

• Managing Multiple Accounts:
  • Both hosts keep most funds at one online bank for simplicity, but it’s okay to use multiple banks if that fits your style.

Choosing a Savings Account

• Interest Rate Shopping:
  • Both hosts use NerdWallet’s rate roundups to find the best options.
  • “Go where the money resides ... highest interest rate.” — Elizabeth (24:11)

Emergency Fund Considerations

• How Much:
  • 3-6 months of income recommended (25:46)
  • Single-income households: aim toward 6 months
  • Hosts acknowledge most people build this over years; don’t stress if you aren’t there yet
    • “Even $1,000 can go pretty far preventing you from pulling out that credit card when your car breaks down.” (Sean, 26:45)
  • Emergency fund amounts will ebb and flow as crises arise.

How Much to Save in Sinking Funds?

• 50/30/20 Framework:
  • 50% needs, 30% wants, 20% debt/savings (including retirement + sinking funds)
    • Example: If John invests 15% in 401(k), remaining 5% of “savings” bucket could be for sinking funds (28:19)
• Employer Match Reminder:
  • Employer match counts toward total retirement savings percentage (Sean, 28:29)
• Prioritization:
  • Build a starter emergency fund first, then increase retirement investing, then expand sinking fund contributions

Categorizing Sinking Funds

• Non-Negotiables:
  • Ongoing, recurring obligations (childcare, insurance, car repairs)
• Lifestyle:
  • Vacations, upgrades, “nice-to-haves”

Notable Quote

“Distinguishing between negotiable and nonnegotiable sinking funds is such a personal matter.”
— Sean Pyles (30:49)

Hosts’ Personal Sinking Fund Strategies

• Sean’s Setup: 6-8 sinking funds (emergency, taxes, fun, car, home maintenance, student loans, checking, etc.). Sinking funds change with life’s evolving goals.

• Elizabeth’s Setup:

  • Just started; main goal is summer camp/childcare, using a Dependent Care FSA (not a classic sinking fund, but serves same purpose).
  • Plans to open a vacation/birthday sinking fund soon.
    • “Every summer, I spend at least $2,500... just for the summer.” — Elizabeth (33:39)

• Common Obstacles:

  • Administrative hurdles (gathering account info, setting up deposits) can delay action.

Notable Moments

“Let me know if you want an accountability buddy. I’m happy to keep pestering you about this.”
— Sean Pyles (37:51)

3. Memorable Quotes & Moments

• On Tariffs:

  • “Tariffs have no way back. These discussions are on the table…” (Lourdes Casanova, 07:55)
  • “Trust, for sure, has been lost.” (Lourdes, 11:13)

• On Sinking Funds and Financial Psychology:

  • “I want the money that’s coming for my student loans to be in its own account, to quarantine it from the purity of the rest of my money.” (Sean, 32:36)
  • “Doesn’t it just feel good to see all that cash in your account? You just don’t want it to go down!” (Elizabeth, 27:50)

4. Timestamps for Important Segments

• Tariff discussion and Supreme Court decision: 1:40 – 15:08
• Listener sinking fund question introduction: 17:58
• What are sinking funds? 18:14–20:24
• How to structure and automate sinking funds: 21:19–23:51
• Choosing a bank for sinking funds: 24:11–25:29
• Emergency funds (how much, how to save): 25:30–27:06
• 50/30/20 budgeting and prioritization: 28:19–29:36
• Distinguishing between types of sinking funds: 30:03–31:16
• Hosts’ personal sinking fund breakdowns: 31:26–36:32
• Practical obstacles to starting sinking funds: 36:32–37:51

5. Actionable Takeaways

• Expect continued volatility and unpredictability regarding U.S. tariffs and trade agreements; be wary of price changes.
• Sinking funds are effective for organizing savings goals, reducing stress, and preparing for both needs and wants.
• Automate sinking fund contributions via direct deposit for greatest success.
• Shop for high-yield savings rates and prioritize ease of account management to ensure you stick with your plan.
• Don't be discouraged by slow progress on emergency funds—small steps count.

6. Next Episode Preview

• The next episode will tackle “how to accurately track your expenses.”

This summary covers all major discussion points and captures the episode’s actionable advice and engaging, accessible tone. For personal finance questions, listeners are encouraged to contact the Nerd Hotline at 901-730-6373 or email podcast@nerdwallet.com.