How to Protect Your 401(k) Amid Market Turmoil from Trump’s Tariffs

With recent escalations in the U.S.–China trade war and former President Donald Trump's tariffs causing fresh market volatility, many Americans are watching their 401(k) balances take a hit. Major stock indices have plunged in response to tariffs and retaliatory measures, and investors are understandably anxious.
If you're among the millions of Americans who rely on your 401(k) for retirement savings, here's how to stay calm, focused, and strategic during the turmoil.
1. Stay on Track—Don't Get Worried During market downturns, the most crucial piece of advice is straightforward: do not panic. Knee-jerk reactions like selling off your investments can lock in losses and derail your long-term growth. Markets have a history of recovering over time, and those who remain invested frequently win. Think back to 2008—the market eventually bounced back stronger. The cost of long-term expansion is volatility in the short term. 2. Revisit Your Asset Allocation
While avoiding panic, it’s still wise to review your asset allocation. Are you too heavily weighted in stocks for your age and risk tolerance? Or are you too cautious to achieve your retirement objectives? A diversified portfolio—typically a mix of stocks, bonds, and other assets—can help cushion you during downturns. It may be time to rebalance your portfolio if your current mix no longer meets your financial objectives or risk tolerance. 3. Consider Rebalancing Opportunistically
Market dips can create an opportunity to buy low and sell high. When you rebalance your 401(k) during a downturn, you might have to sell some assets that have held up well, like bonds, and buy assets that are undervalued, like some stocks, at lower prices. This keeps your allocation at your target and could boost future returns. Many retirement plans offer automatic rebalancing tools—check with your plan provider.
4. Keep Contributing—Especially Now
Even though it may seem counterintuitive, maintaining your regular 401(k) contributions—or, if possible, increasing them—during a market downturn can pay off in the long run. You’re buying investments “on sale,” which may yield strong returns when the market recovers.
Dollar-cost averaging is a strategy that reduces the risk of investing a large amount at the wrong time and helps smooth out the price you pay for investments over time. 5. Keep an eye out for Tariff and Policy Changes. Political and economic policy decisions are closely linked to volatility related to tariffs. Stay informed, but don't let headlines drive your investment decisions. Instead, develop a retirement plan that can withstand fluctuations in the market and adapt to changes in policy. If Trump's tariffs persist or expand, certain sectors (like tech, agriculture, or manufacturing) may face longer-term pressure, while others could benefit. Consider the potential impact when selecting funds or adjusting allocations.
6. Seek Professional Advice
If the market turbulence has you losing sleep, or if you're unsure how to position your 401(k), talk to a financial advisor. Access to financial planning tools and advisory services is provided by many retirement plans. An advisor can assist you in customizing a strategy based on your time horizon, risk tolerance, and retirement objectives—as well as in removing emotions from the decision-making process.