What happened to pensions in February 2025?

US President Donald Trump has wasted no time in making headlines since he returned to the White House on 20 January. After lifting the TikTok ban earlier this year, he turned his focus to trade, threatening substantial new tariffs on imports from Mexico, Canada, and China.

These tariffs include a 25% levy on goods from Mexico and Canada, and an additional 10% on Chinese imports. Trump explained that these measures are part of his broader strategy to address illegal immigration and drug trafficking.

Keep reading to find out how these tariff talks unfolded and what they mean for your pension savings.

Trump and tariffs

President Trump’s new tariffs are already having a significant impact on global markets, creating both challenges and opportunities for pension savers.

For US companies that rely on imports from Mexico, Canada, and China, these tariffs mean higher costs. This could lead to reduced profits and higher prices for consumers. This is raising concerns about the competitiveness of US businesses, particularly in manufacturing, retail and technology. Unsurprisingly, this has caused turbulence in the US stock market, with the S&P 500 Index falling in February.

The domino effect of these tariffs aren’t limited to the US. In China, companies have responded positively, with the Hang Seng Index rising sharply as investors appear confident in their ability to adjust to the new trade environment. This demonstrates how interconnected global markets are - policies introduced in one country can create risks for some, while opening up opportunities elsewhere.

For many years, the US has been the frontrunner in global stock markets, leaving other developed markets battling for second place. But 2025 may flip the script. In an unexpected twist, China and Europe have sprinted to the front, leaving the US trailing in third place. Yet, the race is far from over - being in the lead early on doesn’t guarantee who will come out on top by year’s end.

How US politics is affecting UK pensions

For pension savers, it’s important to know where your money is invested. Although most pensions are diversified across a range of countries and industries, a large share is often tied to US companies due to the country’s dominance in the global economy. As a result, recent US market volatility caused by President Trump’s tariffs may have a short-term impact on your pension’s value.

Your pension likely includes investments in regions like Europe and Asia, where markets such as the EuroStoxx 50 and Hang Seng have recently performed well, helping to offset US market volatility. While the long-term effects of the tariffs remain uncertain, it’s important to stay calm. Pensions are built for the long term and have historically balanced out after experiencing short-term market swings.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.