Understanding the impact of US tariffs on your investments

With markets unsettled by recent developments, it’s natural to feel concerned. Here’s why it’s important to stay focused on the long term.

In early April, the US government announced a series of new tariffs – effectively taxes on goods entering the country – which will apply to a wide range of imported items. A general 10% tariff will be imposed on all goods brought into the US, with significantly higher tariffs introduced for imports from specific countries, including China, Japan and the EU.

This policy has sparked a sharp reaction in financial markets. Stock markets around the world fell following the announcement, and some investors are understandably concerned about what this might mean for their investments.

What are the potential effects?

While the long-term impact is still uncertain, these new tariffs are likely to raise the cost of certain goods, which could put upward pressure on inflation – especially in the US. If people and businesses start to spend less in response, it could also have an impact on economic growth. If other countries choose to respond with tariffs of their own, there’s a risk of a wider trade dispute developing.

Financial markets tend not to respond well to this kind of uncertainty. It’s likely we’ll continue to see some short-term volatility as investors react to the news and try to understand what it means.

What should investors do?

The most important thing to remember is that short-term volatility is a normal part of investing. It may feel uncomfortable when you see your portfolio drop in value, but reacting too quickly can be damaging in the long run.

History shows us that markets have recovered from many shocks in the past – whether economic, political or global.

Trying to time the market can mean missing out on these rebounds, which can have a significant impact on your long-term returns.

If your financial goals haven’t changed, the best approach is usually to stay invested, stay diversified and stay focused on the long term.

How we manage your investments

At Wesleyan, your investments are actively managed by our in-house team of experts. This means we’re constantly monitoring global events – including the latest developments around these tariffs – and we have the flexibility to adjust portfolios if needed.

Our investment approach is built around diversification. By spreading your money across different asset types, sectors and regions, we aim to reduce the impact of short-term events in any one area of the market.

Martin Lawrence, Director of Investments at Wesleyan, says: "President Trump’s announcement has triggered a broad sell-off in global markets – with the exception of perceived safer areas like government bonds. This has affected fund returns and customer valuations across the industry, including at Wesleyan. However, our diversified approach and active positioning across asset classes, regions and sectors means we’re well placed to absorb short-term shocks.

"While tariff announcements are likely to drive market direction in the near term, volatility also creates opportunity. As long-term investors, we look for value during market falls – and we believe that, over time, returns will recover as valuations adjust."

You’re not alone – we’re here to help

While the headlines may feel unsettling, the important thing is not to panic. These types of events are part of the investment journey, and history tells us that markets are resilient over time.

Of course, if you’re feeling unsure or would like to talk things through, your Wesleyan Specialist Financial Adviser is here to support you. They can help you understand how your investments are positioned and whether any changes are needed in light of your personal goals.