Last week was nothing short of dramatic. In a move that stunned everyone, Donald Trump may have committed one of the greatest acts of political self-sabotage ever seen with his sweeping tariff announcement.

What was billed as “Liberation Day” by the US President has been labelled “Obliteration Day” by JP Morgan, who believe the move could mark the end of the recent period of US economic exceptionalism.  US equity markets fell over 10% in just a week, bringing their total decline to almost 20% since peaking in late February 2025. 

Back in November, we had hoped Trump would remain market-friendly and do everything he could to push stock prices higher. Unfortunately, we were wrong.

On Wednesday 2 April, President Trump announced a broad range of tariffs to be applied globally. All imports into the US will face a minimum tariff of 10%, while some countries (such as China) will be hit with tariffs as high as 54%. 

Though tariffs were widely expected, the size and scope of this announcement shocked investors. The term “reciprocal tariffs” was used in the lead-up, but that’s misleading as that might imply tariffs on a small number of largely emerging markets. Instead, the new tariffs are being calculated as half the size of the US trade deficit with each country—hardly a reciprocal approach.

Investors are panicking for two key reasons:  

1. The announcement was far outside expectations.

2. Tariffs of this magnitude will likely be inflationary and harmful to global growth. 

Tariffs will drive input costs higher, meaning prices on everything from cars to clothes to appliances will rise. This is effectively a new tax—one that takes money out of the pockets of consumers and companies. Most economists agree that tariffs like these will lead to slower growth and stickier inflation.  

Economists also fear that the impact will be far broader than the US consumers who voted for Donald Trump. The tariff impact will slow growth and lead to higher inflation around the globe. 

That’s why markets are reacting so strongly. 

Right now, no one really knows how this plays out. It could get worse before it gets better—or it could rapidly de-escalate. 

Trump and his advisors have suggested they’re open to negotiating tariff rates with trading partners, but it’s unclear how long that might take—or whether the 10% base rate is even on the table. Trump is hinting that we hopefully won’t see the worst of the tariffs which is why their implementation was delayed a week (the 10% global tariff on all countries has already been implemented).  

Like any good schoolyard bully, Trump has warned countries not to retaliate. But China and Europe are unlikely to roll over. China has already responded with its own tariffs, and Europe has said theirs will be announced early next week. 

Retaliation could inflame the situation, but backing down gives the US exactly what it wants. It's hard to see how this ends well, particularly if you are a politician who needs to act staunch for their voter base.  

Wall Street still hopes this is a negotiating tactic and that the tariffs will ultimately be watered down. 

At this point, no one has a crystal ball. If Trump softens his stance, markets could rebound quickly. But if he doubles down, we may have further to fall. 

It’s too late to shift your KiwiSaver to a conservative portfolio to avoid the losses. Timing the market is incredibly hard—many have tried and failed. If we get a quick recovery, switching now could lock in your losses and cause you to miss the rebound which is likely to be equally fast. 

History tells us the average market downturn is around 35% (the Global Financial Crisis saw drops of up to 50%). So even if this gets worse, we may be nearing the bottom. 

This is however a good time to revisit your KiwiSaver settings.

1. If you’re planning to use your KiwiSaver for a first home soon, make sure you're in a conservative or balanced fund. You want to protect your capital in case markets fall further.

2. If you're investing for the long term and comfortable with risk, now might be a great time to go aggressive. You’re buying into the market at a discount—and when markets recover, you’ll be glad you stayed the course. 

It's time to revist the Kōura Digital Advice Tools - or give us a call on 0800 527547. We'll help you figure out the best fund for your goals.

Conclusion

This is what being an investor looks like. There are good times (we've had plenty lately) and there are rocky patches like this. The key is staying calm, staying informed, and making sure your investments match your time horizon and risk tolerance.

As for what happens next - who knows? Maybe these tariffs are just a tactic to bring other countries to the negotiating table (read *The Art of the Deal*?). Or maybe we're in for a long, messy trade war. Either way, we'll keep you updated.

*The views and opinions expressed in this article are those of Rupert Carlyon. This content is for informational purposes and should not be considered financial advice. Before making any financial decisions, consider consulting a financial adviser. 

*Kōura Wealth Limited is the issuer and manager of the Kōura KiwiSaver Scheme. A copy of the Product Disclosure Statement is available at kourawealth.co.nz/documents