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How much did your 401K lose this week? Trump tariffs bring stock declines
Trump’s tariffs could impact 401 (k)
Tariffs often cause bad side effects such as higher prices and inflation, making your money worth less. Another big risk — damage to Americans’ long-term retirement goals.
OAKLAND, Calif. – President Donald Trump‘s long-threatened tariffs against Canada and Mexico went into effect Tuesday, putting global markets on edge and setting up costly retaliations by United States’ North American allies.
Starting just past midnight Tuesday, imports from Canada and Mexico are now to be taxed at 25%, with Canadian energy products getting tariffed at 10%. In addition, the 10% tariff that Trump placed on Chinese imports in February is doubling to 20%.
Impact
Big picture view:
Tariffs often cause bad side effects such as higher prices and inflation, making your money worth less.
The other big risk is damage to Americans’ long-term retirement goals.
All the post-election gains stock markets enjoyed were gone on Monday, with the hole only getting deeper on Tuesday.
There is now a trade war between the U.S. and two of its closest allies and trading partners, Mexico and Canada, the latter imposing matching tariffs.
“Canadians are reasonable, and we are polite. But, we will not back down from a fight,” said Canadian Prime Minister Justin Trudeau.
Mexico’s President Claudia Sheinbaum, angry over the tariffs and the economic impact, shared her country’s response.
“We have decided to respond with both tariff and non-tariff measures that I will announce in a public square on Sunday.”
Trump’s tariffs take effect on Tuesday
President Donald Trump said Monday that 25% taxes on imports from Mexico and Canada would start Tuesday, sparking renewed fears of a North American trade war that already showed signs of pushing up inflation and hindering growth.
Inflation
There are many risks that come with tariffs.
“Inflation had come down from 9% to around 3%, but this threatens then to give a boost as far as inflation is concerned, and this could affect US jobs too,” said Professor Alan Gin, a University of San Diego Economist.
All of this sent the three major U.S. stock markets into two choppy sessions each, now down some 3%.
Impact on retirement accounts
Dig deeper:
The stock market’s impact is a blow to the $84 million U.S. families that have retirement accounts.
Looking at prime working ages, the average retirement account for folks in their 30s and 40s is $226,000, according to Empower, a financial services company based in Colorado.
For folks in their 50s and 60s the average is $583,000.
If you’re invested in one of these markets or a combination of all three. The 20-somethings to 40-somethings have lost almost $6,800. The 50s to 60s group lost almost $17,500.
Gold, a hedge against inflation, climbed almost 1% to $2,934 an ounce.
As a group, the ten largest cryptocurrencies, by Tuesday’s stock market close had gained 1.7% in the previous 24 hours.
Lots of folks are now running for the hedges.
“We are going to see high prices for imported stuff from Canada and from Mexico and China. Those are our top three trading partners,” said Professor Gin.
Tariffs against China were also increased from 10-20%.
The Associated Press contributed to this report.
The Source: This story was reported from Oakland, Calif. Information was sourced from the Associated Press, Empower financial services and an interview with a University of San Diego economist.
