Financial Plans, Tariffs, Markets, and Trump

What global politics mean for your investments

A Changing Landscape

If you’re wondering how global politics could affect your financial plans, the return of Donald Trump to the political spotlight is a good place to start.

The United States currently imports more goods and services than it exports, resulting in a trade deficit. Like many developed nations, it’s also grappling with high government debt and an ageing population — challenges that can affect long-term economic growth.

Trump’s core supporters are based in regions like the "Rust Belt" — areas that have seen manufacturing jobs disappear over the years. His economic message focuses on bringing jobs back to the US and reducing reliance on foreign goods.

One of his main tools? Tariffs — taxes on imported goods. While not a new idea, tariffs are central to Trump’s strategy. But while they may sound simple, the knock-on effects are complex. Tariffs disrupt supply chains, push up prices, and create uncertainty in global markets — and, as we know, markets do not like uncertainty.

A Change in Tactics

In 2018, economist Matthew Rooney wrote an essay titled “Tariffs Are Great – If You Like Raising Prices, Undermining Jobs and Inhibiting Innovation.” It highlighted the risks of using tariffs as a form of economic leverage. Rooney wrote:

The fact is that tariff barriers weaken the middle class. In the short term, they raise consumer prices. In the medium term, they weaken the nation’s manufacturing competitiveness and undermine middle-class jobs. In the long term, they inhibit innovation……sapping the nation’s prosperity over time.

Despite this, it feels as though the US is moving towards a more protectionist stance — cutting itself off from the global economy rather than leaning into it.

Tariffs, Markets and Trump

Trump’s approach appeals to those who feel left behind by globalisation. But while tariffs may sound like a quick fix, the reality is more complex. The US doesn’t currently have the infrastructure to fully re-industrialise — building that capacity will take years, not months. In the meantime, consumers are likely to bear the cost through higher prices.

Tariffs are also a negotiating tool — a way for the US to reshape trade deals. Allies, like the UK, will likely end up with more favourable terms than major competitors, such as China. However, all of this will take time to unfold.

Markets thrive on certainty. When there is uncertainty — whether it’s around trade, politics, or the economic outlook — we often see increased volatility. In today’s world of 24/7 news coverage, this uncertainty can quickly turn into fear.

Despite the best efforts of economists, the truth is that we don’t know exactly what the future holds. Yes, tariffs could lead to inflation. Yes, they could spark a global recession. But no one knows when — or even if — that will happen.

What Does This Mean for Your Financial Plan?

Investments are an essential part of your financial plan — and market ups and downs are perfectly normal. We've seen this in 1987, 2000, 2008, 2018 and 2020. While these moments feel unsettling, they are a natural part of long-term investing.

Here are a few common questions we’ve been hearing from clients:

Should I be selling?

It can be tempting to sell during periods of volatility, but history shows that staying invested is often the best approach. Over the short term, markets fluctuate — but over the long term, they tend to grow. Try to zoom out. A single month may look rocky, but five-year returns often tell a different story.

Should I be buying?

If you have cash to invest, now can be a good opportunity. Why? Because you're buying when many investments are on sale. Markets often bounce back before the headlines change. Timing the exact bottom is near impossible — even for professionals.

Should I be worried about my retirement income?

If you’re drawing an income from your portfolio, our approach includes a mix of assets — such as bonds and property — designed to provide income during periods when stock markets are more volatile. We plan for times like these.

Should we change our investments?

Our investment philosophy is designed to help you sleep easy. That means avoiding the temptation to second-guess the market and instead focusing on areas that have historically delivered long-term returns. Your portfolio is diversified across asset types, including short-dated bonds and property, which can provide stability during uncertain times.

Next Step

Periods like this can affect more than just our finances — they can impact our overall sense of well-being. That’s completely understandable.

While we can’t predict the future, your financial plan is built to weather change. We've navigated storms before, and we’re confident in the strategy we’ve put in place for you.

If you’re feeling uncertain or would like to discuss things further, we’re here to support you. Please don’t hesitate to get in touch.

Risk warning

This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Reference to specific products is made only to help make educational points and does not constitute any form or recommendation or advice. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.