Weeky market update: How Trump’s New Tariffs Could Impact Your KiwiSaver Fund

On Friday NZT the S&P 500 experienced its worst day since June 2020 during the covid pandemic. Today’s market update brings new news from the global stage that could affect New Zealand investors—especially those with KiwiSaver accounts. U.S. President Donald Trump’s recent tariff impositions on select foreign goods are causing ripples throughout the global economy, and these changes may trickle down to your KiwiSaver returns.

How Could These Tariffs Affect Your KiwiSaver?

KiwiSaver funds are heavily invested in New Zealand and international assets, meaning that global economic shifts can directly impact the value of your retirement savings. Here’s how the new tariffs might play out:

• Export-Heavy Sectors Under Pressure: As tariffs increase the cost of New Zealand goods exported to the U.S., companies in the dairy, meat, and wine industries could see reduced profit margins. If you have investments in New Zealand-based companies, such as F&P Healthcare, A2 Milk, or Synlait Milk, these companies may face headwinds. This could result in short-term losses or reduced growth in your KiwiSaver fund.

• Global Market Volatility: Trump's tariffs may cause broader market volatility, especially in countries like China, where a significant amount of New Zealand's exports are shipped. Volatility can affect global stock prices, particularly in aggressive KiwiSaver funds that are more exposed to equity investments.

• Currency Fluctuations: New Zealand's currency (the NZD) might also experience fluctuations as global investors adjust to the uncertainty caused by tariffs. If the NZD weakens, it could affect international investments held within KiwiSaver funds, either positively or negatively, depending on the currency exposure.

A Look Back: The Last Time Trump Took Aim at Trade

This isn't the first time the world has reacted to Trump-era tariffs. Back in 2018–2019, when Donald Trump was previously in office, his administration launched a wave of tariffs targeting imports from countries like China, Canada, Mexico, and the European Union. The moves sparked a global trade war, and investors worldwide—New Zealand included—felt the turbulence.

• Global markets reacted swiftly. Major stock indices experienced heightened volatility, with fears of slowing global growth, disrupted supply chains, and retaliatory tariffs dominating the headlines.

• New Zealand exporters were on edge. Key sectors such as dairy, meat, and wine—many of which are represented in KiwiSaver portfolios through listed companies—were concerned about reduced demand and squeezed margins due to the unpredictable trade environment.

• KiwiSaver members took notice. Many saw temporary drops in their fund balances, particularly in growth and aggressive funds exposed to international equities. But over time, markets found footing again, and long-term investors who stayed the course generally saw recovery and continued growth.

While it’s hard to predict how current tariffs will play out, looking at history shows us that markets often react strongly in the short term—but that doesn’t always translate to lasting damage. The key takeaway? Uncertainty isn’t new, and it tends to come and go in cycles.

What’s Next for the U.S. and New Zealand?

It remains to be seen whether these tariffs will escalate or if the situation will stabilise. Given that New Zealand exports a substantial amount of goods to the U.S., any trade conflict could potentially reduce economic growth, which in turn could affect the broader market.

However, the situation is fluid, and other government measures may be taken to protect New Zealand businesses from these tariffs. For now, staying informed and regularly reviewing your KiwiSaver strategy with your financial adviser is key.

Conclusion:

The Trump administration’s new tariffs may cause some turbulence in the global economy, and by extension, your KiwiSaver returns. However, this is part of the ebb and flow of long-term investing. While these tariffs could have a short-term impact, a well-diversified portfolio and a strategic long-term approach will keep your retirement savings on track.

If you're feeling uncertain or want to review your KiwiSaver strategy in light of today’s news, get in touch. Let’s talk about how to protect and grow your wealth, even in the face of global trade shifts. Stay dry, have a good weekend.