What's happened?
US President Trump declared "Liberation Day" and announced new tariffs on goods from countries across the world. Starting 5 April 2025, a 10% baseline tariff will be applied to imports from all countries, except Canada and Mexico. While higher tariffs will be imposed on major trading partners like the EU, Japan, and China, beginning April 9, 2025.
What are tariffs and why does the US want to increase them?
Tariffs are taxes imposed on goods imported from other countries, paid by the importer. For example, when a company in the US buys products from abroad, it pays a tax to receive those goods.
President Trump aims to use tariffs to encourage US consumers to buy more American-made goods by making foreign-made products more expensive. This strategy is intended to protect US manufacturing and create more jobs.
How have markets responded?
In response to the news, global financial markets have fallen due to several key factors:
Anticipation of slower economic growth – Investors fear that the new tariffs could slow down global economic growth, resulting in reduced corporate earnings and overall economic activity. This uncertainty has prompted investors to sell off equities (shares in companies), which are considered riskier investments.
Retaliation concerns – The possibility of affected countries retaliating with their own tariffs, which could further disrupt international trade and economic stability.
Increased costs – Tariffs make imported goods more expensive, which can lead to higher costs for businesses and consumers.
How we're responding
Given the wide range of potential short-term outcomes, we continue to take a long-term approach to managing the Aegon Workplace Default funds.
We remain committed to maintaining a balanced and diversified approach in everything we do. Whilst we haven't made any immediate changes to asset allocation in response to the tariffs, our investment experts are closely monitoring the market's response and will act to take advantage of market opportunities that arise from the volatility.
Should I act?
During these unsettling times it’s important not to panic and consider the current volatility in relation to your long-term investment goals and to remember the value of an investment can fall as well as rise.
A downturn in markets is never pleasant, but while stock market shocks tend to be sharp and painful, they’re usually relatively short-lived as illustrated in the chart below.
Source: Morningstar Direct, produced by Aegon. Chart shows initial investment of £10,000 from 31 January 1980 to 4 April 2025.
The market tends to win more than it loses, especially when looking at longer- term year-on-year figures. Of course, past performance isn't a reliable indicator of future performance.
The current situation may lead to a period of market volatility that could affect your savings/pension investments but making short-term investment decisions may have an impact on longer-term investment goals.
If you’re still some way off from retirement, or if you plan to drawdown from your pot over time, you still have the opportunity to recover in the years before you retire, however this isn't guaranteed.
If you’re closer to retirement and intend to start taking benefits soon, you may want to consider your options. It’s important to consider how current market volatility may impact the investments you currently hold and how this could ultimately affect the final value of your pension savings when you retire. There are things you can do, like perhaps delay taking income or taking less income until such times as markets recover.
Anthony McDonald is manager of the Aegon Workplace Default fund.
Additional support and information
Please read our article on Long-term investor? Here’s how to beat investment panic’ for more information on how to manage market volatility.
You can find out more about your fund’s risk rating and where it invests on the fund factsheet, which can be found on the ‘Fund prices and performance’ page.
You should speak to a financial adviser in the first instance if you need advice about your investments. If you don’t have a financial adviser, you can find one in your area by visiting moneyhelper.org.uk/choosing-a-financial-adviser, or contact Origen Financial Services .
Origen Financial Services Ltd, is wholly owned by Aegon UK plc but operate independently to us.