Global markets have faced dramatic volatility over the past week, in reaction to “Trump’s Tariffs”. In fact, it has dominated almost every headline, worldwide and undoubtedly unnerved many UK consumers.
While Trump has back-tracked slightly by announcing a 90-day delay on the implementation of the original tariffs, all countries (excluding China who sit at 145%) still face tariffs of 10%. However, the tariff value for the UK remains the same as originally decided (10%).
But what does this all mean for you? We’re here to cut through the noise and explain what these tariffs mean for you and your future financial plans.
Making sense of new the US tariffs
So, what are the tariffs that the US is imposing? Tariffs are taxes charged on goods bought from other countries. Previously, tariffs were used to generate extra income for governments. However, more recently, they have been a tool to encourage people to buy domestic goods rather than foreign goods. Competition is created here by increasing the prices of foreign goods via tariffs placed on their import.
This means that any UK goods exported to the US, will now face an extra 10% tariff. Therefore, US customers importing UK goods, may look elsewhere to purchase the same product for a cheaper price.
Tariffs themselves are not unusual, however, the sudden announcement of worldwide tariffs by the US caused a great deal of market uncertainty and, consequently, volatility. And these fluctuations could impact the value of people’s investments or pensions.
How will your pension be affected?
But what does this mean for you and your pension?
With most pensions and investments being directly impacted by market performance, there is always the prior expectation that the markets will fluctuate. However, pensions are an investment for the long-term and the bigger risk lies in any immediate reaction to these fluctuations.
Times like these can be unnerving- and undoubtedly so, but it’s vital to remain calm and to not make any major changes to the current state of your pension. Making a reactive change to your investment allocation or withdrawing a significant amount from your fund, right now, could ultimately lock in permanent losses and this could mean that your fund could run out of money faster than you expected it to.
This, seemingly chaotic time, doesn’t have to be a critical factor in your pension and investment reward. But, if anything, what these events prove is that over time, as often happens, the markets will inevitably settle. So, it is recommended to hold off making any major decisions right now and waiting for those markets to recover.
Historically, we have seen volatile markets impact us in the same way, but from past events, we can be rest assured that the markets will bounce back.
Help is on hand
If you are concerned, the best thing to do would be to speak to an adviser, like the team at My Pension Expert. Our team of advisers will consider not only the wider economic environment, but your personal needs and future goals, too.
In some cases, your adviser may recommend that you hold off making any changes until markets settle. In other cases, they may propose a review of your investment plan or your withdrawal strategy. Whatever recommendation you receive, it will be tailored to your circumstances and future goals. In doing so, you can be rest assured that you will remain on track to the financial future you want.
Periods of volatility, like these, can be unnerving. The most important thing to do is remain calm and remember to use all the resources available to you. Utilising independent financial advice, like those offered from My Pension Expert, can be your (not so) secret financial weapon in unnerving times like these. Advice can help to restore confidence within your financial planning and continue you on your journey to a comfortable retirement.
