Americans' retirement plans are not safe from Trump's trade war

Trump’s trade war has threatened Americans’ retirement plans, such as 401(k)s, as it pummels Apple, which depends heavily on international supply chains. According to Howard Silverblatt, senior index analyst at S&P indices, those retirement plans are often invested in funds that track the S&P 500, and the AAPL (Apple stock) accounts for 6% of the S&P 500’s value.

Apple stock has tumbled 20% this year and 3% earlier this month when Trump demanded that the company move all its production operations to the United States.

Apple is currently the third-largest U.S. company by market value, influencing the S&P 500, which is weighted by market value. The company has lost nearly $1 trillion in market value this year, currently at $3 trillion after topping $3.9 trillion in December.

401(k) plans take a hit from Apple stock falling

Apple has been dropping since the beginning of the year, along with many other stocks, due to Trump’s trade war uncertainty.

Companies like Amazon, Google, and Tesla, which are tracked by the S&P 500, are in the same boat as Apple. Amazon has tumbled by 6%, Google 9%, and Tesla 14% this year, which could add to 401(k)s stalling.

Nvidia and Microsoft have helped keep the S&P 500 afloat with gains of 0.6% and 9% this year, respectively. However, the S&P 500 index is down by 0.01% today. Scott Ladner, Chief Investment Officer at Horizon Investments, revealed that if the market uncertainty continues, some economic consequences will eventually be experienced.

By December last year, American retirement plans held $44.1 trillion, with $8.9 trillion in 401(k)s. The Dow Jones fell by 0.58%, and the Nasdaq dropped by 1.61% today. Seven of the 11 major S&P 500 companies experienced principal stock value drops after the reinstatement of Trump’s tariffs on China, with the energy and information sectors suffering the most. 

Trump revealed that China had breached an agreement with the U.S. to put back tariffs on essential minerals. He did not specify how China had violated the deal and did not offer a permanent solution to the trade war. 

Investors diversify their portfolios to shield their finances against market uncertainty

Tim Steffen, director of advanced planning at Baird Private Wealth Management, urged Americans to find out where their retirement savings are invested to ensure they are well diversified. He added that although funds that track indexes like the S&P 500 are relatively well diversified, different 401(k) plans may offer different exposures to areas of the market.

Steffen revealed that Americans must know how much of their finances have been invested in big companies like Apple to better understand how policies affect their portfolios directly during periods of volatility.  

According to Angelo Zino, a senior vice president and technology analyst at CFRA Research, Apple is significantly exposed to tariff uncertainty, and the stock may continue to fall in the coming months. He urged investors to wait to see the stock price’s outcome. 

The ongoing antitrust concerns against Apple and Alphabet (GOOGL), Google’s parent company, signal more challenges ahead, according to Zino. In August, a federal judge ruled that Google had an illegal monopoly on the search engine. Zino said this could continue to affect Apple stock and, in turn, negatively influence the S&P 500.

Trump’s tariffs eliminated a tax exemption on goods of $800 or less, leading Americans to pay more for imported goods. Consumers are prompted to turn to Amazon and Etsy, which emphasize low prices.

Amazon recently introduced a beta tool called Amazon Haul, a service that allows Americans to pay $20 less for imported items. Analysts said this gives the company a competitive advantage during uncertainty.

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