The 2026 Financial Squeeze: Navigating the Trump Economy

We are well past the ‘first 100 days’ of the Trump Administration. Chaotic headlines are part of our everyday life, and it has translated into the permanent financial reality of 2026. Between the Section 122 “Import Surcharges” and the aggressive enforcement of immigration policies, your pocketbook is feeling the weight of the “Snowball Effect” I warned about last year.

Listen: The Professor’s Audio Briefing.

Updated on March 6, 2026.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

The 2026 Tariff Reality: It’s Not a Threat, It’s a Tax We Paid For

In March 2026, the “Trump Tax” is no longer a campaign theory; it’s a line item in your budget that has affected every U.S. household. After the Supreme Court’s February 20th ruling in Learning Resources, Inc. v. Trump struck down the IEEPA-based tariffs as an unconstitutional reach into Article I taxing powers, the administration pivoted instantly.

By invoking Section 122 of the Trade Act of 1974, the White House implemented a “temporary” global 10% surcharge, with Treasury Secretary Scott Bessent signaling just this week that an increase to 15% is imminent.

The Labor Crisis: Why Your Local Business is Struggling

The immigration raids I discussed last year have had a profound “negative supply shock.” By 2026, the immigrant workforce will have shrunk by over a million workers. This isn’t just a political issue; it’s a consumer issue.

The Financial Snowball Effect: When a neighbor is deported or flees out of fear, your local small business doesn’t just lose a customer; the community loses a taxpayer. As the consumer base shrinks, so does the local tax revenue that must be filled. How? Whether it’s slashing essential services like public safety and road maintenance, or raising property and sales taxes on the remaining residents to make up the difference, the remaining household pays the price for a shrinking population.

Then there is the is persistent economic myth: the idea that undocumented immigrants don’t contribute to the tax base. In reality, the data tells a different story.

In 2026, we are seeing the fallout of a system where millions of people have historically used an Individual Taxpayer Identification Number (ITIN) to pay into a system they often cannot fully access because they don’t have Social Security numbers.

As an attorney, I see this play out in two specific ways that the public often misses:

The Immigration Strategy: Immigration attorneys often advise their clients to file taxes as a primary way to establish “Good Moral Character” and create a paper trail of their physical presence in the U.S. These tax returns are critical evidence when applying for an adjustment of status or a green card. They are paying because it’s investment in their future legal standing.

The Bankruptcy Reality: That common misconception carries over into the world of bankruptcy. Just as you can pay taxes with an ITIN, you can also file for bankruptcy with one. Under Section 109 of the Bankruptcy Code, the requirement to be a “debtor” is based on residency, property ownership, or having a place of business in the U.S., not on having an SSN.

When we remove these individuals from our communities, we aren’t just losing “consumers.” We are removing people who, by 2026, have contributed billions in federal, state, and local taxes. When that revenue vanishes, the “Snowball Effect” ensures the bill eventually lands on the desks of the neighbors who remain.

The Financial Game Plan for 2026

You cannot control the Executive Orders coming out of the Oval Office nor the ensuing chaos, but you can control your response:

The Financial Audit: With the expiration of enhanced premium tax credits and rising utility costs, you must re-evaluate your discretionary spending.

Strategic Purchasing: If you need a major appliance or vehicle, look for “pre-tariff” inventory. Once the current stock is depleted, the new 10% surcharge will be baked into the sticker price.

Used over New: To avoid the “Trump Tax” on imports, the used market remains your best workaround, though even those prices might increase when sellers know the prices on new models have also increased.

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You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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