Trump’s Tariffs vs. Europe’s Low Cost of Living: A World of Difference

Americans are feeling the pinch as a new wave of Trump tariffs has kicked in, driving up prices on everyday goods. Over the past week, fresh import taxes on dozens of countries, including U.S. allies, have gone into effect, raising costs on products ranging from electronics to clothing. It’s a sharp reminder of the ongoing trade policies that began with the original tariffs a few years ago, now intensified by the latest rounds. As an American consumer, you might have noticed price tags creeping upward. Meanwhile, friends in Europe boast about how much cheaper their daily expenses are. Indeed, the cost of living is significantly lower in much of Europe, and the contrast has many Americans wondering if life overseas might be easier on the wallet.

Trump’s New Tariffs: What’s Happening Now?

In his first term, President Trump famously launched tariffs on imported steel, aluminum, and a wide array of Chinese goods. Those “original” tariffs were just the beginning. Economists found that the full cost of those import taxes largely fell on American consumers, causing “substantial increases in the prices” of many goods and cutting U.S. real income by about $1.4 billion per month in late 2018. In short, it was Americans footing the bill through higher prices, not foreign governments.

Fast forward to today, and Trump (now in office again) has doubled down on this strategy. Just in the last week, new tariffs hit imports from over 60 countries. Goods from the European Union, Japan, and South Korea now face a 15% tariff at the U.S. border, while products from places like Vietnam or Bangladesh face 20% tariffs. Trump even announced a hefty 25% duty on imports from India, pushing total tariffs on some of India’s goods to 50%. These moves come on top of existing duties, for example, the U.S. has already been charging 50% on steel and aluminum, 30% on Chinese products, and 25% on imported cars. Essentially almost everything imported now carries an extra tax.

Unsurprisingly, this latest tariff wave is making everyday items more expensive. Inflation in the U.S. ticked up again recently, reaching 2.7% in June (the highest since February) “as President Donald Trump’s sweeping tariffs push up the cost of a range of goods, including furniture, clothing, and large appliances”. Think about that: furniture, clothes, and big home appliances (many of which are imported) are all getting pricier because of tariffs. Companies have started passing these costs to consumers where they can. Even giant retailers like Walmart and big brands like Mitsubishi and Nike have said they’ll need to raise prices to offset the tariff costs. In other cases, retailers are seeing their profits squeezed if they try to eat the costs themselves. All told, tariffs are functioning like a tax increase on American households. One analysis equates the Trump tariffs to an average $1,300 extra tax per U.S. household in 2025, and some estimates run even higher. As economist John Silvia put it, “higher tariff prices lower workers’ real wages… Actions have consequences”. In plain terms, your paycheck doesn’t stretch as far when import taxes drive up prices.

Why Life in the U.S. Is Getting Pricier

To an everyday American, tariffs can feel abstract, but their effects are hitting your wallet in concrete ways. Tariffs are essentially taxes on imported goods. When the government slaps a 15% or 20% fee on something coming in from abroad, U.S. businesses either charge consumers more for that product or find their own profits shrinking. Often, it’s a bit of both. We’ve already seen price hikes on things like groceries and gasoline partly due to these trade policies. In one recent month, prices for toys, clothes, shoes, and sporting goods all jumped in the U.S., and these are “all heavily imported” items. Even inflation, the overall rise in cost of living, is getting a nudge upward from tariffs. Analysts have started calling this phenomenon “tariff inflation,” as the added costs trickle through supply chains and onto store shelves.

It’s also important to remember that tariffs don’t just hit one or two sectors, they’ve become widespread. Right now, the U.S. has a blanket 10% duty on all imports, plus much steeper rates on specific categories like metals and electronics. So whether you’re buying a washing machine or a winter coat, there’s a good chance some tariff cost is baked into the price. One study from Yale’s economic research lab projected that all the tariffs in place for 2025 could raise overall consumer prices by about 2.3%, translating to as much as a $3,800 annual loss for the average household when you factor in indirect effects. That’s a serious dent, particularly for middle-class and lower-income families. And while the U.S. government collects tariff revenue, it’s everyday people who are effectively paying it at the checkout counter.

All of this comes at a time when many Americans are already concerned about the cost of living. With tariffs adding “fine sand in the gears” of the economy and slowing growth, there’s a real sense that the financial pressure is building. No wonder then that more Americans are looking at their budgets and asking: Is there somewhere else I could live comfortably for less? This is where the conversation often turns to Europe and other overseas locales that promise a lower cost of living.

Europe: Where Your Dollar Goes Further

It might sound surprising, but living in Europe can be much cheaper than living in the U.S. in many respects. Yes, big cities like London or Paris can be pricey. But across most of Europe, everyday expenses, from housing to healthcare, take a smaller bite out of your income compared to American life. There are a few reasons for this. For one, healthcare costs are dramatically lower. Most European countries offer free or very low-cost healthcare for residents, which is “a huge saving” for people coming from the U.S. system. If you’ve ever had to pay American health insurance premiums or hospital bills, you know how significant that is. Many American expats find that just not having to worry about medical bills is a game-changer for their budget and peace of mind.

Another factor is currency and inflation. The euro (and other European currencies) has been relatively weak against the U.S. dollar in recent years, meaning your dollar buys more in Europe than it used to. At the same time, inflation in Europe has generally been lower and is expected to stay low in coming years. The bottom line: overall, Europe has a lower cost of living. Even after accounting for Europe’s value-added tax (VAT) (a sales tax that can be around 20% or more) many goods and services are still cheaper over there than similar ones in the United States. Everyday things like groceries, public transportation, and utility bills often cost less. A fun illustration of this is the Big Mac Index (a comparison of McDonald’s Big Mac prices worldwide). A Big Mac costs less in Europe than in the U.S., even after adjusting for income differences. It’s a cheeky example, but it signals a broader trend: for someone earning or spending U.S. dollars, prices in Europe can be a bargain.

Crucially, many Americans moving to Europe find that their quality of life improves while their expenses drop. If you have savings or income in U.S. dollars (say, a remote job or retirement income), you’re likely to “experience a higher standard of living” in countries like Spain, France, or Germany than you could on the same dollars at home. This might mean you can afford a nicer apartment, eat out more often, or simply stress less about bills. Yes, taxes can be higher in Europe, but remember that those often come with benefits, like the healthcare we mentioned, or excellent public transportation that can save you the cost of owning a car. And if you’re not working locally, you might not even be paying income tax there, depending on your situation and tax treaties.

Desirable Low-Cost Destinations for Americans

So, what places abroad offer the kind of lower cost of living that appeals to Americans? Let’s look at a few cities and regions popular with U.S. expats where your money can stretch significantly further than back home:

Madrid, Spain – Spain offers a “surprisingly affordable lifestyle” for a Western European country. In the capital Madrid, rent is nearly 50% cheaper than in Los Angeles, and day-to-day groceries cost much less too. You get all the perks of a major city (culture, cuisine, good public transit) at a fraction of the price of an American metropolis. No wonder Spain consistently ranks as one of the best countries for Americans to move to, combining affordable living, vibrant culture, and excellent healthcare.

Naples, Italy – Italy isn’t just about tourist spots; living in cities like Naples can be very budget-friendly. By one comparison, groceries in Naples are around 30% cheaper than in a comparable U.S. city (like Columbus, Ohio) and rent is about 44% less. That means more room in your budget to enjoy la dolce vita. From fresh local food to weekend trips around the country. Italy also has a relaxed pace of life and rich culture that many Americans find appealing, especially when they realize they can enjoy it without breaking the bank.

Athens, Greece – Greece is often hailed as a hidden gem for affordable living in Europe. In Athens, you can rent an apartment for a shockingly low price! Rent in Athens is over 75% cheaper than in Los Angeles for a similar space. Groceries are about 40% less expensive than in a big U.S. city. Imagine slashing your rent bill to a quarter of what it is now. Greece offers that, along with sunny weather, history at every turn, and a thriving expat community. The government has also introduced tax incentives for foreign retirees and remote workers, making it even more attractive.

Budapest, Hungary – If you’re open to Central Europe, Budapest is a standout choice for cosmopolitan living on a budget. According to one recent report, an expat or digital nomad can live well in Budapest on about $1,200 to $1,800 per month. That covers housing, public transport, healthcare, and enjoying the city’s rich culture. Budapest gives you historic charm and modern amenities (think efficient transit and high-speed internet) at a fraction of the cost of say, New York or London. Plus, English is widely spoken and the city is known to be safe and welcoming to foreigners.

Cascais, Portugal – Just outside of Lisbon, Cascais offers seaside living with some of the lowest living costs in Western Europe. Real estate prices in Portugal are among the lowest in Europe. In fact, you can rent a two-bedroom apartment in the Cascais/Lisbon area for around $750 a month. Compare that to many U.S. cities where you’d easily pay double or triple for the same. Portugal consistently tops lists of American expat favorites for its warm climate, friendly locals, and affordability. Whether it’s enjoying fresh pastries at a café or taking a short train ride to the beach, the day-to-day experience is both enriching and easy on the wallet.

Costa Rica’s Central Valley – (Outside of Europe, but worth a mention!) This region around the capital, San José, has been attracting American retirees and remote workers for decades. And it’s easy to see why: comfortable spring-like weather year-round, a ready-made expat community, and a relatively inexpensive cost of living. You can rent a home, buy fresh local produce, and even afford some household help in Costa Rica for much less than it would cost in the States. The Central Valley, in particular, is known for being beautiful and budget-friendly. A place where you don’t need a millionaire’s bank account to enjoy a relaxed, high-quality lifestyle.

Riviera Maya, Mexico – Another non-European favorite, Mexico’s Riviera Maya (think Playa del Carmen, Tulum, and surrounding areas) offers tropical living at a discount. Many Americans move here for the sun and sand, only to find that their overall expenses, housing, dining, entertainment, drop considerably. It’s not the rock-bottom cheapest region in Latin America, but it provides a great balance of modern convenience and affordability. You can dine on authentic tacos, explore Mayan ruins on the weekend, and maintain a comfortable apartment often for less than the cost of basic living in a big U.S. city. Plus, it’s a quick flight from the U.S., which is a nice bonus for those who want to visit family back home.

Each of these places has its own vibe and considerations (language, visas, jobs, etc.), but they all show that moving abroad can dramatically lower your cost of living while delivering a great quality of life. Cities like Lisbon, Valencia, or Bali (to throw in an Asian option) regularly appear on “best places to live abroad” lists for affordability. The key is that your U.S. dollars often have more purchasing power overseas (especially now, given economic conditions) and many countries welcome American expats.

A Friend’s Advice: Is Relocation Right for You?

Hearing about cheap rent and affordable healthcare in far-off places can be exciting, almost like a travel fantasy come true. But moving abroad is a big decision, and it comes with challenges too. As your well-informed friend, here’s my take: relocating abroad can indeed be a smart move if rising costs at home are squeezing your budget and stress levels. The Trump tariffs and the higher prices in the U.S. are a real one-two punch. It’s completely understandable that you’d look at Europe or elsewhere and think, “Could I really cut my expenses and enjoy life more over there?” In many cases, yes, plenty of Americans are already doing just that.

Before you pack your bags, do your homework. Research visa requirements, health insurance (for when you’re not a tourist but a resident), and the job or income situation you’d have in your new country. The good news is that more countries than ever have programs for remote workers and retirees. From Portugal’s Golden Visa to Costa Rica’s retiree residency, governments are making it easier for foreigners to settle in if they can support themselves. And culturally, you’ll find that locals often appreciate the skills and diversity that expats bring.

Ultimately, the decision to move abroad comes down to what you value. If you’re seeking a lower cost of living, many parts of Europe (and beyond) offer that in spades, without asking you to sacrifice safety or modern comforts. You might trade a bit of convenience (say, 24/7 shopping or super-sized homes) for a simpler, more relaxed lifestyle. But if you ask folks who’ve made the leap, they’ll often tell you it’s worth it. They’re saving money, enjoying new experiences, and not looking back.

So, as a friend, my advice is this: keep an open mind. The tariffs and cost-of-living pressures in the U.S. are real, but you’re not stuck with them. The world is more accessible than ever, and living overseas is not just for the ultra-rich or ultra-adventurous. It can be for you, the everyday American, seeking a better balance. Whether it’s sipping coffee in a Spanish plaza or strolling a Portuguese beach town at sunset, all while knowing you’re spending a lot less than you would back home, the appeal is easy to see.

In the end, it’s about making your life rich in experiences but lean on expenses. And if that means hopping on a plane and starting a new chapter abroad, there are resources and communities (like those of us at relocation services) ready to help you make it happen. The world really can be your oyster, and it might even save you a buck or two.

References

Trump tariffs go into effect just as US economy shows signs of strain | AP News https://apnews.com/article/trump-tariffs-into-effect-economy-warning-signs-eafe20de9abad312573b320fd4b5fb33

US inflation from tariffs that economists feared begins to emerge | Inflation News | Al Jazeera https://www.aljazeera.com/economy/2025/7/15/us-inflation-from-tariffs-that-economists-feared-begins-to-emerge

The Impact of the 2018 Tariffs on Prices and Welfare - American Economic Association https://www.aeaweb.org/articles?id=10.1257%2Fjep.33.4.187

Trump Tariffs Erode US Retail Profits, Trigger Price Hikes and $3,800 Household Losses https://www.webpronews.com/trump-tariffs-erode-us-retail-profits-trigger-price-hikes-and-3800-household-losses/

Is Living in Europe Cheaper Than Living in America? https://www.investopedia.com/articles/personal-finance/020816/living-europe-cheaper-america.asp

Best European Countries for Americans To Move to (2025) https://www.movebuddha.com/blog/best-european-countries-for-americans-to-move/

A life in Europe at Rs 1.7 lakh a month isn't as impossible as you might think - The Economic Times https://economictimes.indiatimes.com/nri/work/a-life-in-europe-at-rs-1-7-lakh-a-month-isnt-as-impossible-as-you-might-think/articleshow/123038626.cms?from=mdr

10 attractive cities that prove you can move overseas and live comfortably - The Washington Post https://www.washingtonpost.com/realestate/10-attractive-cities-that-prove-you-can-move-overseas-and-live-comfortably/2018/05/24/b2cca8a8-5de7-11e8-9ee3-49d6d4814c4c_story.html