Planners have urged investors not to make any knee-jerk reaction to the newly introduced import tariffs from the US government.

Yesterday and today saw markets fall across the globe in reaction to US President Trump’s introduction of tariffs on all goods imported into the US.

However, Financial Planners and wealth managers have urged against making quick changes to investment portfolios as a result of the immediate impact.

Lindsey James, investment strategist at Quilter, said investors will need to be patient and look to the long-term picture rather than focusing on market volatility.

She said: “Ultimately, Trump is playing a high risk game. He is risking stoking a fresh inflationary spiral in the hope that over time jobs and industry are restored to the US. This is following an election campaign where he promised to lower inflation and bring interest rates down. But, tariffs have rarely ended in positive outcomes, and signs are already pointing to weakening consumer and business sentiment and the risk of a slowing US economy. 

“Trump continues to tout tax cuts, but there remains very little detail on what this means or when they will come about. Markets will be wanting more detail on both this and further deregulation, and given the scale of these tariffs that may need to come sooner rather than later for US equities. For businesses it remains a very volatile and uncertain economic period, and this will be reflected by markets for the time being. Investors will need be patient and calm, staying invested for the long-term.”  

Rob Morgan, chief investment commentator at Charles Stanley, urged investors to “avoid sea sickness” by keeping your eyes on the investment horizon rather than the market volatility below.

He said: “It’s often the case that the market falls more quickly than it rises, which is psychologically challenging. It’s particularly bad luck if you have just invested a lump sum, but there is consolation from the fact that time spent in the market is far more important than timing the market over long periods, so if you have a long term view you shouldn’t be too concerned.

“Selling out in fear can be the worst thing to do. Large falls can be followed by large rises, so you risk losing on both sides – selling when prices are depressed and not buying in until they have moved higher. Sadly, this is a trap that many investors fall into. Being out of the market also means you are no longer collecting – and potentially reinvesting – any income your investments are paying. In the absence of a crystal ball, keeping invested is often the best strategy, no matter how uncomfortable.”

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said many advisers may see unsettled clients due to the market turbulence caused by President Trump’s tariffs.

She said some clients may look to put off going into pension drawdown or turn towards annuities: “For those coming up to retirement, we could see people choosing to put off taking an income from their pension through drawdown until the situation is more settled. We could also see more people opt to go for a guaranteed income through an annuity.

“These are offering good value right now with the most recent data from HL’s annuity search engine showing a 65-year-old with a £100,000 pension can get up to £7,626 per year from a single life level annuity with a five-year guarantee. This is the highest since unisex annuity rates were introduced in 2012. With the potential for interest rates cuts in the coming months and the impact on long term gilt yields uncertain we could see more people take the plunge now.”

Financial Planning Today Analysis: The introduction of tariffs on all good imported into the US is just the latest in a series of protectionist measures made by the US government since the inauguration of President Trump. Whilst markets across the globe have reacted negatively to these tariffs, it seems investment managers and Financial Planners expect those who stick to the time-honoured investment principle of committing for the longer term and sticking to their investing plan to see these short-term moved pale into significance over the years.