How Do Trump's Policies Affect My Investment Portfolio?

Trade tariffs could fuel inflation, market volatility; look to opportunities outside US

- Sue-Ann Tan

Much has been said and happened since US President Donald Trump took office on Jan 20, with policies like trade tariffs coming thick and fast.

But how do these measures and the global uncertainty affect a young investor's portfolio?

That was certainly one of my first questions when the world received the news that Mr Trump won the election in November 2024. I did not have many US investments, aside from a robo-portfolio that had some US equities.

But the question is pertinent, especially as analyst reports came in about how his policies would affect everything from consumer companies to tech stocks.

More young investors now have portfolios weighted in US equities, so the volatile movements of the US market in response to Mr Trump's policies can have an outsized impact.

According to OCBC Bank data, young people aged 21 to 35 invested in the US markets 2½ times more in 2024 than in 2023.

The proportion of US market investments for this age group was more than 50 per cent in 2024, against about 40 per cent in 2023.

Wise Private Singapore chief executive Kevin Teng said the longstanding dominance of US equities, especially in technology and consumer sectors, has attracted investors looking for strong returns.

But with the implementation of new tariffs, market conditions are shifting.

“While US stocks remain attractive, concerns about inflationary pressures and supply chain disruptions could make investors more selective, as historical data suggests that prolonged tariff impositions tend to increase market volatility and dampen sentiment, especially in sectors reliant on global supply chains,” he warned.

Mr Teng noted that inflation is also projected to rise due to tariffs, which means the Federal Reserve—or the Fed—is expected to maintain a cautious stance rather than cut interest rates.

“This could also lead to short-term fluctuations, making market-timing riskier for young investors,” he said.