--- title: Is Your 401(k) Affected by Trump's Tariffs? What to Know description: With a 401(k), you carry the risk because the investment decisions are yours. Here's what you should know. canonical: https://time.com/7275216/is-your-401k-affected-by-trump-tariffs-what-you-should-do/ author: Rebecca Schneid article:opinion: false article:content_tier: free article:published_time: 2025-04-05T18:03:12.000Z article:modified_time: 2025-04-07T14:20:29.000Z article:section: Politics og:title: Is Your 401(k) Affected by Trump's Tariffs? What to Know og:description: With a 401(k), you carry the risk because the investment decisions are yours. Here's what you should know. og:url: https://time.com/7275216/is-your-401k-affected-by-trump-tariffs-what-you-should-do/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt634a29d8e788c741/6998c593f1b08284576f13a0/GettyImages-2207864093.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 4209 og:image:height: 2368 og:image:alt: US-ECONOMY-MARKET-STOCKS og:type: article twitter:card: summary_large_image twitter:title: Is Your 401(k) Affected by Trump's Tariffs? What to Know twitter:description: With a 401(k), you carry the risk because the investment decisions are yours. Here's what you should know. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt634a29d8e788c741/6998c593f1b08284576f13a0/GettyImages-2207864093.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  # Is Your 401(k) Affected by Trump's Tariffs? Here's What to Know and What You Should Do > Sponsored content. 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It explains the politics, personalities and power dynamics behind the headlines, three times a week. #### Where can I get analysis of Washington politics by email? D.C. Brief is TIME's free Washington politics newsletter, available at time.com/newsletters. It is written by a TIME senior correspondent who covers the capital full time. #### Who writes TIME's D.C. Brief? Philip Elliott, a senior correspondent at TIME, writes D.C. Brief. #### Is D.C. Brief free? Yes. D.C. Brief is free at time.com/newsletters. ## Video: Trump’s Tariffs Draw Strong Reactions in Congress [Watch (HLS stream): Trump’s Tariffs Draw Strong Reactions in Congress](https://cdn.jwplayer.com/manifests/Vi4J6xmB.m3u8) (3:07)  _Published 2025-04-03. President Donald Trump’s expansive new tariffs flips on its head a decades-long global trend of lower trade barriers and is likely, economists say, to raise prices for Americans by thousands of dollars each year while sharply slowing the U.S. economy._  by [Rebecca Schneid](https://time.com/author/rebecca-schneid/)  ## Rebecca Schneid Reporter Updated: Apr 7, 2025 2:20 PM UTCPublished: Apr 5, 2025 6:03 PM UTC  A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, on April 4, 2025\. Markets extended a global selloff on April 4 as countries around the world reeled from President Donald Trump's tariffs. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, on April 4, 2025\. Markets extended a global selloff on April 4 as countries around the world reeled from President Donald Trump's tariffs. Timothy A. Clary—Getty Images  by [Rebecca Schneid](https://time.com/author/rebecca-schneid/)  ## Rebecca Schneid Reporter Updated: Apr 7, 2025 2:20 PM UTCPublished: Apr 5, 2025 6:03 PM UTC The U.S. and global stock markets have been hit hard since President Donald Trump announced his latest tariffs on April 2\. The so-called “Liberation Day” saw the introduction of blanket 10% tariffs on all imported goods, and additional import taxes placed on 60 other countries. In the [worst week for U.S. stocks](https://www.marketwatch.com/livecoverage/stock-market-today-dow-s-p-and-nasdaq-set-for-further-losses-after-1-679-point-blue-chip-tumble) since the markets crashed in 2020 during the COVID-19 pandemic, Dow Jones closed on Friday 2,000 points down, the S&P Index plunged 6%, and Nasdaq dipped almost 6%. The [volatility](https://www.marketwatch.com/investing/index/vix) of the market has risen significantly, causing concern from investors and businesses alike, and sparking fresh fears that the U.S. may be heading into a recession. **Read More**: [_Is the U.S. Heading Into a Recession Amid Trump’s Tariffs? ‘Liberation Day’ Fallout Sparks Fresh Fears_](https://time.com/7274531/trump-tariffs-is-the-us-heading-into-a-recession-stock-market-fears/) There has also been a surge in concerns being voiced by people worried about the impact on their 401(k), as many have noticed a dip in their investments. Here’s what you need to know about how the economic turmoil resulting from Trump’s tariffs will affect your 401(k) and what you should do moving forward. ## **How is your 401(k) affected by the tariffs?** A 401(k) [is an employer-sponsored retirement plan](https://time.com/personal-finance/article/pension-vs-401-k/) where a person has the option to make contributions that are deducted from their paycheck. In some cases, the company will match your contributions up to a certain percentage of your salary. The value of 401(k) accounts is closely tied to fluctuations in the stock markets, as the portfolio allows you to invest in assets which are directly tied to the market’s performance. As such, when the stock market fluctuates, so too does a 401(k). With a 401(k), you carry all the risk because the investment decisions are yours. With such extreme dips in the stock market, some Americans are seeing their retirement savings take an intense hit. During an appearance on [NBC's _Meet the Press_ on Sunday, April 6,](https://www.nbcnews.com/meet-the-press/video/treasury-sec-bessent-says-there-doesn-t-have-to-be-a-recession-full-interview-236654149913) Treasury Secretary Scott Bessent was asked about the market turmoil and the concerns regarding retirement savings. Host Kristen Welker said: “More than 160 million Americans are invested in the market. Many of them have spent their lives saving for their retirement. What is your message to Americans who want to retire right now and who've just seen their lifetime savings drop significantly?” Responding to the question, Bessent remarked that he thinks it's a “false narrative,” and suggested that people maintain a “long-term view.” “Americans who want to retire right now, Americans who have put away for years in their savings accounts, I think they don't look at the day-to-day fluctuations of what's happening. And you know, in fact, most Americans don't have everything in the market,” said Bessent. “Most Americans in a 401(k) have what's called a '60/40 account.' 60/40 accounts are down 5 or 6% on the year. People have a long-term view. They have a program that the reason the stock market is considered a good investment is because it's a long-term investment. If you look day-to-day, week-to-week, it's very risky. Over the long term, it's a good investment.” Bessent's remarks mirror those made by Trump. On April 3, when aboard Air Force One, [Trump was asked by a reporter](https://www.youtube.com/watch?v=pwKczP3nhaY) about the rising concerns among Americans and whether he has checked his own 401(k) since his tariff announcements stunned the stock market. Trump said: “I haven’t checked my 401(k).” The President also doubled down on his belief that though the markets look bad now, his tariffs will ultimately be a good thing for the economy. “I think our markets are going to boom; we’ve got to give it a little chance,” he said. The President once again shared his optimism about the economy in an update he posted on his social media platform, Truth Social, on Saturday, April 5\. “This is an economic revolution, and we will win. Hang tough, it won't be easy, but the end result will be historic. We will Make America Great Again,” [he said](https://truthsocial.com/@realDonaldTrump/posts/114285375813275308). **Read More:** [_Why Economists Are Horrified by Trump’s Tariff Math_](https://time.com/7274651/why-economists-are-horrified-by-trump-tariff-math/) However, experts have their concerns. Teresa Fort, associate professor of business administration at Dartmouth, says: “The U.S. market has outperformed everywhere for the last couple of decades, but I don’t know if it’s clear that this is going to continue… the entire world economic order has been shifted, and people are going to need to rethink what \[their\] optimal allocations should be.” ## **What do experts advise you should do about your 401(k)?** Brad Clark, founder and CEO of Solomon Financial, says that this is not the time to panic and take your money out of savings. “It’s scary,” he admits, but the response to fear, in his professional opinion, is to stay the course—especially if you are a younger investor preparing for future retirement. “When you're flying somewhere and you're in the worst turbulence you've ever been in, all you can think is, ‘I've just got to get off this plane,’” says Clark. “But the plane was built to handle this. That's kind of like your portfolio.” For people two or three years from retirement, Clark says their portfolios should already be less risky, and they should not have full market exposure to their investments. However, for those who are still 10 or more years away from retirement, there could be positives to note. “What a great buying opportunity,” Clark argues. “This is how the Warren Buffetts of the world make money. Greedy when everyone else is fearful, and fearful when everyone else is greedy.” Clark’s advice to those people—who are a decade or more away from retirement— is to “continue to invest like you’ve always invested,” and he is confident that this will pay off in the long run. In a column for the Washington _Post_, personal finance columnist and author Michelle Singletary echoed this sentiment. “If you’re in your 20s, 30s, or early 40s, don’t let what’s happening now scare you away from the stock market. Keep investing,” [she said](https://www.washingtonpost.com/business/2025/04/03/stock-market-401k-funds/). **Read More**: [_How to Prepare For the New Social Security ID Policy Ahead of Its Initiation in April_](https://time.com/7272921/social-security-new-identity-proofing-policy-how-to-prepare/) Laurence Kotlikoff, professor of economics at Boston University, takes a more cautious approach for people of all ages. He recommends not investing in anything risky now, instead starting back from a safe investment position and eventually building your investment portfolio back into something more risky. By starting conservatively and building up, Kotlikoff says that investors can save themselves from pain later on. “There’s no reason to believe that the market will reverse itself,” he says. “Leave only in the market what you can afford to lose and don’t spend outside of it.” He also recommends people consider doing what he and his wife did soon after Trump’s Inauguration Day. In preparation of potential market fluctuations, they built a [TIPS ladder](https://robberger.com/tools/tips-ladder/#:~:text=A%20TIPS%20ladder%20is%20a,cash%20flow%20throughout%20the%20ladder.), which is a portfolio of Treasury Inflation-Protected Securities. TIPS are U.S. government bonds that adjust for inflation, ensuring that the bond’s principal increases with inflation and decreases with deflation. “It's a combination of spending and investing behavior that is called ‘upside investing’ that leads you just to have upside risks,” Kotlikoff says. “You're losing that downside because you're never spending out of anything that's risky, you’re just spending out of this TIPS ladder.” Fort echoes Kotlikoff’s caution, noting that while some economists are saying to stay the course as usual, these are not usual times, and she thinks that it is likely that the markets are only going to dip further. For her own mother, who relies on her 401k, Fort has reduced her exposure to the market as much as possible. “This is a fundamental shift in the world order,” Fort emphasizes once more. “If you are close to retirement age, you’ll want to look for the safest assets if you cannot afford another 20% to 30% decline in the market.” Overall, it's worth noting that expert advice varies depending on the age of the person with the 401(k) and what stage they're at in their working lives. For example, Fort did not take the same measures for her own financial portfolio as she did for her mother's, since she is younger and has more time until retirement. Across the board, expert guidance tells us not to panic and not to make any rash financial decisions. ## Transcript Hearing about the tariff announcement from yesterday. I was there. I'm excited. Uh, here we have. A president gives a damn about American jobs. That's exactly what this is. I'm sick and tired of the rest of the world taking advantage of our workers and our companies. So the rest of the world they want. They want to put barriers up to our companies, which impacts American jobs. That has ended. They should reduce their tariffs to zero. Stop. Stop making it difficult for American companies to compete. I mean, if you look, I believe in trade. When I was governor of Florida, I did 15 trade missions. I wouldn't trade. I think it's really good for for our country and it's good for other countries. But this idea that other countries can make it difficult for an American company to be successful, all they're doing is reducing American jobs. We've had 90,000 factories move out of this country since NAFTA. It may have worked for the elites in the governing class and the people who get rich in Northern Virginia around here, but it hasn't worked for real people. So we're going to have balance. We're going to actually tell these countries, you've been ripping us off, and we're going to treat you like you treat us. So I think if you combine that with tax policy of making these tax cuts permanent for working folks. You combine that with energy dominance and combine that with regulatory reform. You can combine that with not paying illegal immigrants taxpayer dollars with a fair trade policy. We're going to have prosperity in this country. So I mean, paying attention to, you know, the stock market this day versus the next day. And we could talk about ten year treasuries. That actually looks pretty good right now. But I think that that misses the point. This is a much broader vision of actually taking on the forces that have worked against working people for generations. I think it's heading us toward a catastrophic economic downturn, a recession, along with disastrously rising prices. I'm seeing already my constituents in Connecticut fearful, angry, deeply troubled by potential job losses, as well as higher prices for everything from gas to groceries. You've probably never heard of the Manufacturing Extension Partnership. It helps small and medium manufacturers Thrive. It helps them fix and improve their manufacturing processes and be more productive. And I just got noticed last night that it's been shut down, canceled, cut, defunded like so much else that this cloud of locusts known as Doge has destroyed the impact for states all over the country for small and medium manufacturers who are critical to our competitive future. Of this, I think ill conceived, poorly executed last second cut will be lasting. President Trump's whole justification for slapping tariffs on our closest partners and allies is to bring manufacturing back to the United States, and at the exact time that he is harming our relationships around the world, making costs higher for working Americans. This program that helps small and medium manufacturers grow has been eliminated. They don't know what they're doing and the consequences for our economy, for our costs, for our families and communities will be harmful and lasting. Thank you. ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/7275216/is-your-401k-affected-by-trump-tariffs-what-you-should-do/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/7275216/is-your-401k-affected-by-trump-tariffs-what-you-should-do/"},"headline":"Is Your 401(k) Affected by Trump's Tariffs? 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