How Trump’s Tariffs Might Affect Your 401(k)

Americans’ retirement accounts stand to suffer from President Donald Trump‘s trade war, Fox News‘s Peter Doocy said on Tuesday.

Talking about the Trump administration’s efforts to get thousands of federal workers to retire voluntarily, Doocy said: “It’s tough to make the argument that you should retire if your retirement accounts are getting throttled, which is what is happening right now.”

Why It Matters

Trump made tariffs a central point of his second term, repeatedly vowing during his 2024 presidential campaign that imposing additional fees on imports from the country’s main trade partners would enrich the United States and solve its many economic problems.

But tariffs have caused concerns among economists and dismay among investors, leading the stock markets to plunge in recent days as Trump announced sweeping tariffs on Canada, Mexico, and China—and now on all countries exporting steel and aluminum to the U.S.

Experts warned that everyday Americans might bear the brunt of the trade wars that are likely to rage as a result of Trump’s tariffs, while fears of the U.S. sliding into a recession this year are growing.

What To Know

Speaking on Fox News on Tuesday, Doocy, the network’s senior White House correspondent, said that Trump was doubling down among criticism of his tariff policies. However, he expected the president to try to reassure “nervous CEOs” later on the same day.

“President Trump, of course, has great job security. He never needs to run for reelection again,” Doocy said. “But these CEOs who are coming to town, including from IBM, HP, and Qualcomm, they all need to go back to their boards and to their shareholders to explain what exactly is going to happen,” he added.

“And we also expect the White House to try to reassure folks who are sitting there looking at their 401(k)s going down and down and down,” Doocy said.

“This is a White House that came in trying to get federal workers to retire by the hundreds of thousands, but it’s tough to make the argument that you should retire if your retirement accounts are getting throttled, which is what is happening right now. So we expect—we hope for answers to all of these curiosities any minute.”

On the same day, Doocy questioned Trump about the message he was sending to the country by buying a Tesla car at full price while many Americans are seeing their retirement funds go up in smoke.

“What is your message, President Trump, buying a new car while there are some folks who will see this clip at home and they are struggling with their retirement accounts, down at the moment, uncertainty about work ahead,” Doocy said during an event at the White House promoting Elon Musk‘s cars.

“I think they’re going to do great,” Trump said. “I think our country had to do this.”

Does 401(k) Going Down Have Anything To Do With Trump’s Tariffs?

The 401(k) is the most common form of retirement plan in the U.S., with an estimated 34.6 percent of the American population having this type of account in 2020, according to U.S. Census data.

When workers sign up for a 401(k), they agree to contribute part of their paycheck to an investment account. Their contributions are sometimes matched by their employer, in total or part. These retirement accounts are closely tied to the stock markets, as their profitability depends on their asset allocation.

Investors are fretting about Trump’s policies and growing concern about a recession hitting the U.S. this year. The benchmark S&P 500 ended the day down 0.76 percent on Tuesday at 5,572.07 points, up from a daily low of 5,528.41. The Dow Jones Industrial Average was down 1.14 percent.

The stock markets’ plunge following Trump’s imposition of sweeping tariffs on some of the U.S.’s closest and most important trade partners spells trouble for Americans and their retirement plans.

What People Are Saying

President Donald Trump told Fox’s Maria Bartiromo on Monday, answering a question about the possibility of a recession: “I hate to predict things like that. There is a period of transition because what we’re doing is very big.”

Rob Haworth, a senior investment strategy director with U.S. Bank Asset Management, in a statement: “Uncertainty is the driver around the market’s recent selloff. There are growing concerns about potential economic weakness, due in part to tariff impacts.”

Brendan Duke, senior director for Federal Budget Policy at the Center on Budget and Policy Priorities, in a statement shared with Newsweek: “Trump’s reckless, haphazard approach to tariffs is killing the dream economy he inherited. The tariffs would cost families thousands of dollars if enacted, offsetting any tax cut from the 2017 tax law for the bottom 40 percent of Americans.”

Sam Stovall, chief investment strategist at investment research and analytics firm CFRA Research, told USA Today that Americans with a 401(k) plan should not panic: “The people who would be hurt by [the stock market dip] are the emotional ones who are likely to do something irrational. That could be somebody at any age.”

Ryan Detrick, chief market strategist at financial services firm Carson Group, told USA Today: “For longer-term investors, it’s important to remember: scary headlines and volatility happen every single year. And the truth is, 2025 is not any different.”

What Happens Next

A trade war between the U.S. and some of its closest allies, including Canada, Mexico, and the European Union, could deeply hurt the American economy, driving up the cost of living and possibly plunging the country into a recession. On Monday, Trump refused to rule out the possibility of this worst-case scenario coming to reality.

However, as quickly as they plunged, stock markets could rebound should the situation improve.