How Might Tariff’s Impact a Divorce?

In this blog post, I am going to discuss the economic topic on the top of everyone’s minds: tariff’s. Specifically, how might an increase in Federal tariff’s impact a New Jersey divorce?

Impact of Tariff’s on a New Jersey Divorce

There are many economics who believe that an increase in federal tariff’s levied by the United States against other countries, including Canada, China, and Mexico, may lead to certain changes in our personal finances as citizens. As all divorces are, at heart, driven by personal finance, we must therefore consider whether tariff’s may have an impact on New Jersey divorces.

Tariffs, which are essentially taxes placed on goods provided, produced in, or sold by other countries, can potentially have an impact on New Jersey Divorces, as I see it. Particularly as the tariffs we are attempting to enforce on other nations are being met in turn with their own tariff’s against the United States.

Certain businesses, particularly those involving the importing or exporting of goods may be impacted by tariffs. You can imagine that the cost of doing business, and therefore the profitability of certain businesses, may be directly impacted by tariffs. For instance, if you are in the business of importing Canadian Maple syrup, then the additional costs associated with the business will be born by your company, and thus by you and your partner in your divorce.

There is also the likelihood of indirect impacts. For instance, even if you’re not in the business of importing Canadian lumber, if you are a developer and home builder in New Jersey, or even a carpenter, an increase in cost for lumber will impact your bottom line. These are arguments that can be made as part of valuations moving forward, though it will be somewhat difficult to argue given how in flux tariffs currently are at the time of this writing.

Another impact of tariff’s may be increased inflation. As expenses are often passed along to consumers by businesses, and as we are already in a sustained era of increased inflation, the passing of additional tariffs could increase inflation in the United States, which will also have an impact on divorces.

When you negotiate a divorce, there are four primary ways to address alimony: 

• Mutual waiver of alimony – This is self-explanatory, neither party will receive alimony.
• Lump sum buyout – You determine the amount for a buy-out sum. This is often a one-time buy-out where a larger percentage of some other asset is given to pay for alimony. Care must be made here to make sure the buy-out is tax-effected.
• Regular monthly payments that can be modified if there is a change in circumstances.
•  Regular monthly payments that cannot be modified even if there is a change in circumstances. (Cases such as Lepis v. Lepis) provide that alimony can be modified if there is a “permanent and substantial” change in circumstances, but courts have held that the parties can waive this right to revisit alimony if they include “Anti-Lepis” language in their divorce agreements.

You can easily imagine what the impact of hyperinflation would be in a situation where there was a lump-sum alimony buyout. $100,000 today might have seemed like enough support to last several years while the alimony recipient gets their feet back on the ground. Now, perhaps $100,000 is only enough to purchase a jar of pickles. And that well-thought out plan to include “Anti-Lepis” language now has one serious winner, and one serious loser.

Inflation and Tariffs

Of course, the above is a somewhat ridiculous example. There’s a reason why the Weimar Republic is still our go-to example of hyperinflation. Because it’s something that does not occur all that often. (It’s why we still discuss Tulipmania as well).

No respected economist is yet claiming we are in a period of “hyperinflation,” or that tariff’s will soon create such a situation, but the fact remains that we are in a period of increased inflation. Steady inflation, meaning that quarter over quarter the cost of basic goods such as food, fuel, housing, and transportation are increasing.

Persistent inflation will continue to have an impact on people’s lives, and thus it will have an impact on people’s divorces, and tariff’s are part of the equation.

Conclusion

As tariffs continue to dominate the headlines, we must keep the potential impact of tariff’s on our minds as divorce practitioners or those facing a New Jersey divorce. The world, like the law, is always changing, and the ability to evolve with the times is essential in increasing our results.