How Will Proposed Trade Tariffs Affect My Investments?

The flow of commerce is predicated on both the importers and exporters utilizing human capital, technology and natural resources to provide their products and services. The U.S. economy no longer primarily makes goods; it’s now overwhelmingly service-based (financial services, media, transportation and technology). We have been dependent on China’s low-cost manufacturing for decades, which continues to be vital and not easily replaceable in our supply chain. Investing in a stock, mutual fund or exchange traded fund allows you to own stock in hundreds of companies that supply goods or services. You are likely spreading your risk among different stock sectors, thereby reducing the probability your entire portfolio will respond the same in the event of a trade war.

As an investor, the goal is to build a portfolio to withstand the uncertainties and volatility in the market. So, when the proposed tariffs take effect, you have hopefully protected your nest egg given the fact you have no control over which industry will be negatively impacted. As a global economy importing and exporting is a necessity, so the best an investor can do is diversify. 

Bonnie Struck, CMFC®, Worley Erhart-Graves Financial Advisors

This article was included in the Worley Erhart-Graves Quarterly Newsletter. Download the printable version here.