Trump tariffs putting you off investing? Think again

Since the beginning of the year, world news has documented the near-daily events surrounding President Trump’s tariff policies and their effects on the global economy, trade, and stock markets.

In fact, we published an article detailing the initial fallout of the tariff policies on 17 March. Since then, not much has been made clear, and many experts and consumers remain in the dark about their potential long-term impact.

While these tariffs are undoubtedly an important part of the global financial landscape today, the unpredictable nature of the Trump administration’s political chess moves (including a recent public fallout with his former ally, Elon Musk) might make you nervous. And where your investments are concerned, tariff news may be affecting your financial behaviours more than you consciously realise.

Keep reading to discover how your financial behaviours, particularly where investing is concerned, may be affected by the Trump administration’s tariff policies.

78% of financial advisers believe their clients’ investment behaviours will change as a result of tariffs

According to Professional Adviser, 78% of financial advisers believe that their clients will be less likely to invest as a result of the 10% baseline tariffs Trump has imposed on many countries, including the UK.

Breaking this data down, the report says that:

• 27% of IFAs say clients are likely to move investments to cash
• 30% think their clients will invest less than usual
• 40% expect that there will be an uptick in those seeking advice.

Let’s explore each of these elements in turn.

1. Moving investments to cash

Understandably, seeing the stock market fluctuate before your eyes could spook you into moving investments to cash.

Cash has long been viewed as a “safe haven” that protects your money from harm. And while it’s certainly true that investment losses can happen, and cash protects your money from this risk, there is a hidden risk to cash: the eroding effects of inflation.

While some cash accounts offer competitive interest rates – Moneyfacts says that, as of 6 June 2025, you can open a Cash ISA with a starting rate of up to 5.46% – usually, these rates fall after a year, producing middling or low long-term yields.

Meanwhile, inflation (reflecting the increasing price of goods and services in the UK) rises each year, slowly eroding the real-terms value of your cash.

For example, according to the Bank of England’s inflation calculator, a service that cost £10,000 in 2020 would have cost around £12,664 in April 2025. That’s an increase of approximately 25% of the original price. Even with a competitive savings account, over the long term, inflation is likely to erode the value of your cash.

On the other hand, while investment returns are not guaranteed, long-term historical market performance suggests that your money has a greater chance of outpacing inflation – even when political events like tariffs rock the boat.

Schroders research indicates that over a 20-year period, equities have historically outpaced inflation 100% of the time. Whereas, cash has only outpaced inflation 60% of the time.

So, while Trump’s tariffs may make you feel like cash is the safest choice, the data suggests otherwise. If you are investing over the long term (which is normally preferable), riding the wave of market volatility is usually the most lucrative choice.

2. Investing less than usual

You may have decided to leave your existing investments where they are – a great first step – but you could feel cautious about continuing to invest as normal.

For instance, let’s imagine you dedicate a portion of your monthly income to a Stocks and Shares ISA or similar investment vehicle. Within this vehicle, you’re investing in a fund that encompasses a diverse range of equities, such as a US S&P 500 tracker fund. No matter what happens, you hold these investments over the long term.

This strategy is known as “passive investing” and refers to making consistent investments throughout the year without worrying about whether markets are up or down at the point of investment, and holding them despite any fluctuations that occur.

Usually, passive investing works very well. Trying to time the market by only investing when markets are down, known as “buying the dip”, could result in missed opportunities and cause you more stress than peace of mind as an investor, whereas a slow, consistent, measured approach allows you to capture all the market’s opportunities while evening out any short-term losses that occur.

Let’s return to the original issue: Trump’s tariffs. If you allow the news to spook you and decide to stop investing for a while, you could miss out on stock market bumps that offer significant yields – all due to concerns about volatility.

Taking the S&P 500 index as an example, the below graph shows just how far equity values plummeted once the president announced, and began to roll out, his tariff policies. At this point, you could have decided to hold off on making further investments until the coast was clear.

Source: Google Finance

Unfortunately, if you had stopped investing during this dip, you would not have reaped the benefits of the subsequent market uptick that happened from May onwards.

Maintaining disciplined investing habits could help you avoid missed opportunities and give you the confidence to stay the course despite volatility.

3. Seeking advice

Of course, here at Kellands, we would always recommend that investors seek bespoke advice, tariffs or no tariffs.

Not only can an independent financial planner offer advice based on qualifications and knowledge, rather than emotion or opinion, but we’re also here to help calm your nerves. You are only human, and the constant media noise surrounding the economy and stock markets could be unnerving and even keep you up at night.

Your Kellands financial planner is here to soothe your worries and help you come up with a solution to any financial issues you are facing.

Get in touch

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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