Is your 401(k) in danger? This is how Trump’s tariffs can affect your retirement savings

Donald Trump campaigned on making the United States prosperous again and helping American families with the increased cost of living. However, while the price of eggs continues to rise he has been more focused on immigration and slashing government spending.

He has also been moving forward with his threats to impose tariffs that he touted as “the most beautiful word in the dictionary… It’s my favorite word.” However, Wall Street showed that it has a different opinion on the matter which could put Americans’ 401(k)s at risk.

Trump tariffs putting Americans’ 401(k)s in danger

Not long after returning to office for a second time, the now 47th US president said that he was going to implement an additional 10% tariff on Chinese goods and a 25% on Mexican and Canadian goods, with the exception of Canadian energy exports which would only be taxed at 10%. However, he put those on pause for a month shortly before they were set to go into effect when the stock markets dropped in response.

The three nations are the United States’ three largest trading partners and the tariffs would mean added costs for American companies that rely on imports to do business in the US. Especially hard hit would be manufacturers of automobiles in the US who rely on the cross-border traffic to assemble cars and trucks.

So, it was no surprise then that when Trump activated the threatened tariffs on Tuesday Canada, China and Mexico, reacted swiftly announcing retaliatory tariffs on American goods kicking off a trade war. So too did the stock markets.

Trump tariffs: “A little disturbance”or “the start of a downward spiral”

So far this week, the major averages, including the Dow Jones, Nasdaq and S&P 500, have all fallen roughly 3%. The latter has now seen all the gains it had made since Trump was elected president in November wiped away and down 6% from its all-time high just before Trump was sworn in as the 47th president.

This has put a serious dent in Americans’ 401(k) plans and one that could get much worse if the trade war deepens. While President Trump didn’t mention the stock market for the first time when he addressed a Joint Session of Congress on Wednesday, on previous occasions he has made a point to boast about how high the stock markets are, he did acknowledge that Americans may feel some pain due to tariffs.

“Tariffs are about making America rich again and making America great again, and it’s happening, and it will happen rather quickly. There’ll be a little disturbance, but we’re okay with that. It won’t be much,” Trump said.

His sentiment tough isn’t felt by the deputy secretary-general of the International Chamber of Commerce Andrew Wilson. “Our deep concern is that this could be the start of a downward spiral that puts us in 1930s trade-war territory,” he warned speaking to the Wall Street Journal. In response to the severe economic downturn that started with the stock market crash in 1929 the US Congress passed the Smoot-Hawley Tariff Act. This dramatically raised tariffs and made a bad situation much worse.

At the height of the Great Depression nearly a quarter of the nation’s total workforce were unemployed. Wages for those who were still employed plummeted by 42.5% according to the FDR Presidential Library and Museum.

Trump puts tariffs on hold for 30 days

Trump put another one month hold on the tariffs that affect the auto industry and later on many others against Canada and Mexico but it did little to help revive the stock markets. The White House press secretary Karoline Leavitt said that Trump had talked to the leaders of the “big 3” automakers, Ford, General Motors and Stellantis.

“He told them that they should get on it, start investing, start moving, shift production here to the United States of America where they will pay no tariff,” she told the press.