TRUMP SLUMP
From holiday cash to mortgages – how to protect your finances NOW to beat Trump’s tariffs
We explain what you can do to dodge price rises
IF you're worried about what Donald Trump's mean for your pocket, we explain how to protect your finances.
Earlier this week, the US President announced a raft of tariffs on countries around the world, including a 10% tariff on all imports from the UK.
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While the initial impact of those tariffs is likely to be felt by people in the US, a looming global trade war could affect everyone in the long run.
The government is considering imposing "retaliatory tariffs" on 8,000 products if no pact is agreed by May 1.
If prices rise quickly, this can lead to a spike in inflation, which is often followed by rising interest rates in a bid to slow price rises down.
Higher interest rates can lead to more expensive borrowing costs, like higher mortgage rates and pricier loans.
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Tariffs can also mean consumers in the US will buy less foreign products, which could hit UK businesses and ultimately damage our economy.
Another impact of trade wars is that it can cause stock markets around the world to fall, which can reduce the value of any investments you may have, like your pension.
A staggering $2.2trillion was wiped off stock markets with the Nasdaq suffering its biggest tanking since the start of Covid.
But how can you protect your finances from all of these scenarios?
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We've spoken to experts to look at what you can do now, from fixing your mortgage to reducing spending.
FIX YOUR MORTGAGE DEAL
Rising inflation could mean another spike in our mortgage interest rates if the base rate rises.
The base rate is a tool that the Bank of England can use to keep inflation close to its target, which is 2%.
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But there are ways you can combat rising prices, like locking into a fixed rate deal.
Sarah Coles, personal finance expert at Hargreaves Lansdown, said: "The uncertainty means that if you have a remortgage looming, it’s well worth shopping around for a deal as early as possible.
"If rates rise between now and when you need to remortgage you’ll have locked in a cheaper deal, and if they fall, you can track down something more competitive."
Speak to a whole of market mortgage broker to find the best deal.
You will have to pay a free usually a flat rate (around £500) or a percentage of the loan amount (between 0.35% to 1%).
HOW COULD TRUMP'S TARIFFS AFFECT YOUR PENSION
TRUMP'S punishing tariffs have triggered a global stock market meltdown of the kind not seen since the start of pandemic lockdowns in March 2020.
Here The Sun's Business Editor Ashley Armstrong writes about how it could affect your pension.
A market rout that started in Asia in reaction to hefty tariffs on China, Japan and Taiwan has rippled with trillions of dollars already wiped off.
Shortly after China announced it would retaliate with 34 per cent tariffs on US goods London’s biggest index of the most 100 valuable UK companies tanked by 3.8 per cent, or 321 points, to 8152.31 points - the steepest one day fall in five years.
The FTSE 250 - which measures midcap listed companies and is seen as the best reflection of the UK economy - has also tumbled by 3.9 per cent, or 766.61 points, to 8150.37 points.
To put it into context, the market reaction is more frightening than when Russia invaded Ukraine in 2022.
There’s little signs of the market sell-off getting better either.
So how should Brits protect their money and pensions?
For those a little way off retirement, advisers are urging Brits not to panic. Typically most pension pots are managed with a mix of shares, bonds and other assets - this is a deliberate strategy to try to cushion against future hefty stock market crashes.
While stock markets are falling, bonds prices are rising as investors switch their bets.
If you’re in a defined benefit pension plan, which is now much more common for public sector workers than in private business, these typically are run even more conservatively to ensure payout obligations are met when workers retire.
For those in defined contribution pension plans - which are topped up monthly via payslip contributions from employees and employers - it might be worth checking how your pot is managed and if it is heavily invested in one area.
But it is important to not just stop investing - pension contributions are a tax free way of saving for the future.
One option could be to direct pension managers to increase exposure to bonds, or to infrastructure funds which are generally less risky and have stable levels of returns.
The problem is that for years British pension funds have been piling into US shares, which have outperformed the rest of the world. This is particularly true of the big tech firms, which have soared in value. As a result about 45 per cent of assets DC pension schemes are invested in US stocks and these shares are collapsing in value.
While Chancellor Rachel Reeves wants our pension funds to invest more heavily in the London stock market, at the moment that’s not such a safe bet as the FTSE 100 has tanked so heavily. Pension funds typically invest heavily in the bigger firms, such as Barclays, Shell, BP - all of which have suffered big falls.
So where’s safe?
Think about investing in so-called “essential” stocks and safe havens. Utility companies, such as the power companies such as SSE and National Grid, will be in demand as we will still need energy. National Grid also has a big business in the US.
Food retailers are also holding up relatively well with shares in Tesco, Marks & Spencer and Sainsbury’s not being hit by the sell-off. Consumers will still need to eat, and as we saw during the pandemic and cost of living crisis, inflation has typically helped their profits too.
Tobacco stocks will also be back in fashion, partly because in times of stress more people spark up and smoke.
Gold has already had an astonishing rally and keeps breaking record highs, with the current prices now above $3,127. However, with threats of a global trade war intensifying, there will be even greater demand for safe havens.
For canny investors the other idea is to bet on British businesses which have large manufacturing sites in America already. The idea is that these firms will still be able to protect their profits by escaping tariffs when selling US made products to US consumers.
Analysts at AJ Bell have come up with a list of FTSE 100 firms including catering firm Compass, which has more than two-thirds of its facilities in the US. Defence firm BAE Systems has 59 per cent of its facilities in the US. Medical device firm Convatec also has 40 per cent of its manufacturing sites in the US while testing business Intertek has 46 per cent.
DON'T PULL OUT OF YOUR PENSIONS
Millions of people will likely see the value of their pensions fall as markets around the world have dropped in response to Mr Trump's tariffs.
It's important not to make any knee-jerk responses to this, such as pulling money out of your pension.
While it can be scary to watch the value of your money fall, you haven't actually lost anything until you pull it out of the stock market.
This is because your money can go back up again if it remains invested, whereas if you withdraw it, you have guaranteed the losses.
Matt Ennion, from Quilter Cheviot, said: "President Trump's tariffs have sent shockwaves through markets, and this will be making investors feel very nervous.
"However, the best thing to do in times like this is to stay calm and remain invested.
"Markets recover and investing is a long-term game, so while it may feel uncomfortable now, the worst thing to do is flee to cash."
BUILD UP SAVINGS
A great way to combat financial uncertainty is to build up a nest egg to protect you in future.
If you're able to, putting aside some savings every month for a rainy day can help you to feel more at ease and will come in handy if you face a shock bill down the line.
It could be a good idea to fix into a long-term savings rate, if you're able to, as this means you will get a guaranteed return from your bank or building society.
Edmund Greaves, financial expert at blog Mouthy Money, said: "If inflation creeps up, locking in fixed-rate deals on your savings could shield you from rising costs."
BE CAREFUL ABOUT TAKING ON DEBT
Like mortgages and savings rates, the cost of other borrowing through loans and credit cards could also increase.
Taking on more expensive debt means it is more difficult to pay back, as you have to pay a higher amount in interest.
This means a smaller chunk of what you pay back each month is actually clearing your debt.
HOLIDAY CASH
Exchange rates around the world have fluctuated in response to Mr Trump's tariffs.
The Pound is currently up against the Dollar, which means you can get more for your money if you're planning a trip to the States.
Other currencies have also risen and fallen, so it's worth checking if you could get more for any other trips you have coming up.
If exchange rates have improved, consider exchanging some of your cash now.
Rates could rise or fall in future, so it may be best to exchange half now and half later.
That way, if rates get worse, you have got a better deal now, but if they get better, you can still benefit.
FIX YOUR ENERGY DEAL
Energy prices have gone up this month after the price cap rose again, and the impact of the tariffs could cause household bills to rise further.
Ofgem's energy price cap has risen by approximately 6%, adding an extra £111 per year to the average household bill.
Trump's tariffs could also mean higher energy bills for British households, according to analysts at Aurora Energy Research.
Anise Ganbold, the head of global energy markets research at Aurora, said: “Tariffs mean the US produces more goods at home, demanding more energy, and leaving less oil and gas available to export to Europe.”
The US supplies the UK with gas, so any reduction in this could push up gas market price, which would then hit household energy bills.
Households can protect themselves by switching to a fixed deal.
Fixed deals work to protect customers from bill hikes if Ofgem was to increase the price cap in the future.
Those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract's term.
There are a number of fixed deals which don't have exit fees, which means you can switch if prices do fall.
To find the best fixed energy deals, start by visiting price comparison websites, which aggregate various offers from different energy suppliers.
The best sites include Uswitch.com and MoneySavingExpert's Cheap Energy Club.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “An effective solution may be to lock in a fixed tariff to protect your finances from any further bill shocks.
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“There are far more deals available on the market now than there were during the energy crisis.
“To find the right tariff for your needs, shop around and consider all options including cheaper variable tariffs, a tracker product that changes daily based on wholesale cost, or time-of-use tariffs that can benefit people charging electric vehicles overnight or those that want to take better advantage of off-peak rates.”
How to save on your energy bills
SWITCHING energy providers can sound like a hassle - but fortunately it's pretty straight forward to change supplier - and save lots of cash.
Shop around - If you're on an SVT deal you are likely throwing away up to £250 a year. Use a comparion site such as MoneySuperMarket.com, uSwitch or EnergyHelpline.com to see what deals are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount usually for 12 months.
Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information - which you can find on your bill - to hand to give the new supplier.
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you payAn up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
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