Trump's tariffs see markets tumble

Updated 9 April 2025

You will have noticed your UniSaver account balance has fallen in recent weeks, especially if you are invested in an option with a significant allocation to growth assets like shares. At the time of writing, the S&P 500 index, which tracks the performance of the 500 largest US companies, has fallen almost 19% from its all-time high on 19 February. The sell-off has been triggered by a changed US trade policy as President Trump imposed tariffs initially against its three largest trading partners – Canada, Mexico and China – and subsequently on imports from most other countries. Investors are concerned about possible economic consequences such as an uptick in inflation, a slowdown in the expected pace of interest rate cuts and even the prospect of the US economy being tipped into a recession. Market sentiment shifts quickly, which means any comment about the current state of play is soon outdated. For this reason, you might be interested to follow the weekly market updates provided by our investment consultant and manager Russell Investments.

Think carefully before switching investment options

Remember, volatility is to be expected with growth assets. Options like Growth have performed well over the past 2 years, but with the potential for higher longer-term returns comes a greater risk of occasional shorter-term losses in value. Sometimes the magnitude of those losses in value is significant, as they are now. However, history tells us markets generally recover – eventually. Think back to the beginning of the coronavirus pandemic in 2020 where share prices plunged and then recovered in a little over a month. Or the dramatic drop in share prices during the 2008 global financial crisis when the recovery took much longer. When markets fall sharply as they have now, it’s natural to want to take action by moving to a more conservative option. The danger with that approach is that you ‘lock in’ the losses and miss out on the market recovery when it comes. Short-term events shouldn’t change your long-term approach. 

All investment involves an element of risk and none of us knows what is around the corner. That’s why we recommend you stick to an investment strategy based on your personal circumstances. 

Given current events, it might be a good time to start thinking about your investment ‘personality’ and what level of risk you are truly comfortable with. Our risk profiler [external link] is a good place to start to work out whether you’re in the right investment option for your investment timeframe. It might help identify that a change in strategy is appropriate at some point in the future. It might also help you reassure yourself that your current strategy is the right one. 

Seek professional advice if you need to

Changing your investment strategy is an important decision. We recommend you seek professional financial advice if you are unsure what to do. The Sorted website has information to help you choose a financial adviser. Go to sorted.org.nz [external link] and search ‘financial advice’.