New Zealand investors may soon feel the effects of US President Donald Trump’s sweeping trade tariffs, with financial experts warning of potential volatility in KiwiSaver balances. As Trump imposes steep levies on major trading partners, including China, Canada, and Mexico, global markets have responded with turbulence—raising concerns for retirement savings and investment funds.
However, Milford Asset Management Head of KiwiSaver Murray Harris has urged Kiwis not to panic.
Stock Market Volatility and KiwiSaver Concerns
On Wednesday (NZT), Trump enacted tariffs of 25% on imports from Canada and Mexico and 10% on Chinese imports, triggering immediate retaliation from the affected nations. The move has rattled global markets, with the S&P 500 erasing most of its post-election gains and dropping below its 125-day moving average, a key technical indicator watched by investors.
Rupert Carlyon, founder of Koura KiwiSaver, described the immediate outlook as grim. “In the short term, it’s likely to be pretty ugly,” he said. “The question is how much longer they react badly for.” Carlyon expects KiwiSaver balances to start showing declines by the end of the week.
How KiwiSaver Funds Are Being Affected
While the tariffs do not directly target New Zealand, their ripple effects are already being felt. One of the country’s largest manufacturers, Fisher & Paykel Healthcare, has warned that increased costs due to its reliance on Mexican-based production could impact its bottom line. The company’s share price dropped more than 6.5% on Tuesday.
AUT economics professor Niven Winchester said last month that KiwiSaver holders would likely be among the first to notice the financial impact. “We had this relatively nice framework for trading, which benefits everyone, and now a big handful of sand has just been thrown in the cogs of that system,” he said.
Despite the turbulence, some analysts see potential upsides. Dean Anderson, founder of Kernel Wealth, noted that a stronger US dollar has helped cushion some of the market’s volatility for New Zealand investors. “This period serves as a powerful reminder about diversification’s value,” he said, adding that while high-profile stocks like Tesla have been volatile, well-diversified portfolios have held up better.
Expert Advice: Stay the Course
Financial advisors are urging KiwiSaver investors not to overreact to short-term market movements. Murray Harris, head of KiwiSaver at Milford Asset Management, stressed the importance of a long-term approach.
“Every single day, markets go up and down,” Harris said on The Mike Hosking Breakfast. His advice is to ignore the market fluctuations, stay the course, and not panic.
Harris pointed out that while seeing KiwiSaver balances drop can be unsettling, downturns also create opportunities. “When markets go down, your contributions are actually buying more value. You’re buying cheaper units in your fund. And then, when markets recover, you’ll benefit from those more units that you bought with your cheaper dollars,” he explained.
Carlyon echoed this sentiment, advising investors to avoid checking their balances too frequently. “You’ve got to take a long-term view,” he said. “The problem at the moment is that no one really knows what’s going on.”
Short-Term Uncertainty, But Stability Possible
While Trump has signalled that more tariffs could be coming, there are also signs that political and economic realities may force adjustments. The US president has reportedly spoken with Canadian Prime Minister Justin Trudeau about easing tariffs on the auto sector, and some analysts believe he may soften his stance if markets continue to slide.
Mike Taylor, founder of Pie Funds, believes Trump ultimately wants to protect economic growth. “Trump is a proponent of the art of the deal. One of the things he wants is strong economic growth,” Taylor said. “I would suspect that if this starts to have a more meaningful impact on economic growth or inflation, even if the stock market falls further, he might change his tune a bit.”
For KiwiSaver investors, the key takeaway is clear: market volatility is expected, but history suggests that markets tend to recover over time. Experts recommend staying diversified, avoiding reactionary moves, and consulting financial advisors before making portfolio changes.