Trump’s new tariffs explained: How does it affect you?

Trump’s new tariffs are shaking global markets but what does it mean for your investments? Rachael and Kurt break it down and share practical advice on how to respond with confidence, not panic.

Video transcript

Hi guys, Rachel here from Your Wealth Consultants. I'm here with my colleague Kurt, and we're just here to have a bit of a chat today about what's going on in the market. Over the last week or so, if you've been following the news, there has been a lot of talk about President Trump and his tariffs that are coming into place. Basically, what this means is that he is going to charge extra to import into America from any other country.

In Australia, we've been hit with a 10% tariff, but countries like China have been hit with tariffs as high as 40%. This has resulted in what the media is calling a "bloodbath" on the stock exchange. Today alone, we're down 151 points from the start of the day, which is a significant drop for just one day.

So, what does all of this actually mean? We thought we'd discuss how this might impact you and what you should do at this time. Kurt, what does this actually mean for us?

That's a great question. It really depends on having a long-term view. The reason we invest the way we do is to protect against situations like this. If you look back over the past 5 to 10 years, there have been many instances where the stock market has dropped by similar amounts, such as during the bond sell-off or even the global financial crisis, if you go back a bit further.

So, this is not an unusual thing for the stock markets. I think everyone is just reacting to the level of tariffs that have been announced. However, it's important to stay the course and have a longer-term view. There’s actually some science behind it.

Essentially, what President Trump is trying to do is reset some assets that are currently overvalued and bring the American dollar back to a better value without needing to print more money, as they do with quantitative easing. He understands that the market will go down before it eventually comes back up, but there is a long-term goal in mind with this strategy.

So, what do you think, Kurt? What should our clients—and anyone, really—be doing at this time?

Great question. I think that if you're feeling really concerned or anxious, or if you're struggling to sleep at night, it's always a good idea to get in touch. Having a chat with either yourself or me can help put those concerns at ease and show you how it affects you specifically.

You may have noticed that your portfolio has some cash or reserves set aside, and that’s exactly why we have a buffer like this—to manage market events like this. Even though the market has gone down, that doesn't necessarily mean you’ve lost money. This is a really common misconception. You don't actually lose any money until you sell the asset. So, while today it might look like your portfolio is worth $20,000 less, it doesn't mean you've truly lost that money.

The key is not to get swept up in the emotions of it all. If you don’t need that money for anything, there’s no need to sell, and you don’t need to realize any of those losses.

On the flip side, if you have cash at the moment, this could be a good time to consider putting in extra contributions or revisiting your broader financial plan to see if now is the right time to make some contributions or rebalance. It all comes back to your strategy and making sure you're aligned with your long-term goals. And, of course, if you're unsure about what to do, reach out to us.

So, what we’re saying is: don’t panic. This is happening in the market right now, and it’s too late for us to react to it without realizing some losses. At this stage, it’s best to ride the course. If you need cash and are thinking about taking it out of a super or investment account, please give us a ring. We’d be happy to discuss your options, as it may be better to hold off for now or explore other measures to move forward.

For most of you, we have sufficient reserves and cash in your accounts. So, sit back, ride the wave, and don’t panic.

Thanks, guys. Have a great weekend!