Sarah Snell Cooke, Founder/CEO, The Credit Union Connection
April was Financial Literacy Month, and May is Mental Health Awareness Month. Whether by coincidence or design, the timing underscores a critical truth: Your credit union members are facing increasingly complex challenges in today’s economy. President Trump’s recent tariffs, combined with ongoing financial uncertainty, have put significant strain on both household budgets and mental health.
The Tariff Tangle: A Financial Strain on Households
In 2025, the U.S. has seen a dramatic escalation in tariff rates—reaching levels not recorded since 1901. The average effective tariff rate has surged to 28%, and Chinese imports now face a 145% duty! This shift translates into approximately $4,800 in additional annual expenses for the average American household, impacting core necessities like electronics, clothing, and groceries. It’s a challenge your members are feeling—and, quite possibly, you and your team are as well.
The broader economic effects are equally concerning. The Federal Reserve has flagged increasing risks tied to tariffs, including potential increases in unemployment and inflation—pressures that will ultimately show up in your loan portfolios and balance sheets. In response, the Fed has held interest rates steady, signaling caution amid these volatile conditions.
Mental Health: The Silent Casualty
Financial stress doesn’t exist in isolation. It is deeply intertwined with mental health. A March 2024 survey by Bankrate found that 47% of U.S. adults said money negatively affected their mental well-being. The leading causes? The rising cost of living and a persistently shaky economy.
Meanwhile, the 2024 Financial Health Pulse report reveals that 70% of Americans remain financially unhealthy, with middle-income households being especially vulnerable. For many members, these dual burdens of economic and emotional stress reinforce each other in a difficult cycle.
Adapting Credit Union Offerings
Credit unions must take a proactive and empathetic stance in response to these conditions:
Supportive Initiatives: Expand financial counseling services to help members manage rising costs, avoid predatory lending, and build more resilient financial habits.
Flexible Financial Products: Re-evaluate lending and savings programs. Consider adding skip-payment options, short-term emergency loans or promotional savings accounts tied to the current economic situation.
Community Engagement: Offer practical workshops on budgeting, debt management, and financial wellness. Give members tools to regain a sense of control.
Mental Health Partnerships: People have many feelings about their finances. Collaborate with local mental health providers to offer accessible resources, workshops or referrals, particularly for members facing financial trauma.
Impact on CDFI Credit Unions
Low- to moderate-income individuals are particularly vulnerable during economic downturns. As we learned during the pandemic, they often face job losses earlier and more frequently than higher-income workers, especially in sectors like retail, hospitality and caregiving. These jobs are also predominantly staffed by women, people of color (43.8% of the population) and immigrants.
These historically disadvantaged segments highlight the critical role of credit unions and CDFIs in providing targeted financial support and resources to uplift these communities during challenging economic times.
Strengthening Member Resilience
The convergence of tariff pressures and economic uncertainty presents a formidable challenge for both consumers and credit unions. To live up to the credit union promise of people helping people, we must remain agile, mission-driven and deeply attuned to our members’ evolving needs.
Understanding the ripple effects of today’s policies and conditions is more than an exercise in risk management—it’s an opportunity to lead with purpose.