If you have been thoughtfully saving an adequate portion of your income by using the various pretax instruments available to Americans -- the 401(k), the IRA, the SEP-IRA, etc., then you are aware of, if not panicked by, the precipitous drops in the various equity investments those plans have been suffering the past week or two.
As we all know, those drops have come as a result of President Trump's fulfillment of a daily campaign promise to level the playing field as far as international trade is concerned. You can't make an omelet without breaking eggs, as they say, and the president is leveraging the awesome purchasing power of the USA to reach his (and our)goal, i.e., to lower or even remove tariffs imposed by foreign nations on USA exports.
The result, for the moment, is panicked selling of stocks, which has drastically lowered the value of those savings, and driven jokes about people's 401(k)s feeling like "201(k)s." We get it.
Not to provide more personal information than necessary, but I'm a full-time employee of a company, I'm in my 70s, and I have been setting aside savings for a long time. That I haven't seen my savings drop as much as some is a tribute to the foresight of the financial services company I've used for ten years now. But it has dropped. And I'm not thrilled about it.
That said, I get it. I get what President Trump is trying to do, and I support it. Most of all, I support the idea of blowing up the international tariff and non-monetary rule status quo, one that allows Japan, for example, to export a huge number of cars to the USA while American car makers cannot export any to Japan.
That's just an example, and there are many, many others. It is astonishing how much higher a tariff percentage had been placed by other countries on USA goods, effectively cutting off their markets to high-quality American products.
It is equally astonishing to many to discover that it's not even all about tariffs -- the European Union, for example, puts ridiculous standards on some products (autos, for one) for the obvious purpose of keeping our products out -- so even if there were no tariffs on American goods, we still couldn't sell there.
President Trump said just last night, and not for the first time, "Other countries have been ripping us off for 50 years!" And he is quite right. Foreign markets are often closed to American products, while we go on and import from them. Our manufacturers here could expand hugely with open foreign market access.
Of course, where all this tumult affects the price of corporate stocks is where we need to focus, since those 401(k) values are a composite of all the stock shares held. And where cooler heads prevail, we can see that if XYZ Corp. was worth ten dollars a share two weeks ago, its innate value (i.e., its value based on the profitability of the company) didn't suddenly drop; the price dropped because panicked people sold their shares more than other, saner people, were buying them.
What is going to bring the stock prices back to where they were? Well, there are billions of dollars sitting on the sidelines ready to jump back in to the market -- the dollars those sellers got from panicking and selling their shares. What they are waiting for are moves by some of the significant foreign trading partners -- Japan, South Korea, the EU, China -- to negotiate tariff and non-monetary trade deals.
Those negotiations are starting as we speak, and let's face it -- those Wall Street types sitting on the sidelines with their investment cash know quite well that Donald Trump is a force in negotiations. Once the first few countries reach agreements -- maybe even after the first one does -- all that money comes back into the market and the stock prices go back to where they were.
Moreover, the smartest nations are going to be first in line. The president's son Eric, who has remained with the Trump Organization (the real estate development business) and is not a politician, had a quote a few days ago to that effect. He would not want to be the last nation to settle a trade deal with his father, he pointed out, noting that "I've seen that movie my whole life."
It will be interesting, for example, when you notice that some nations are responding by putting retaliatory tariffs on American goods exported to them -- but if they've already put non-monetary barriers in so we can't export to them, their threat is a paper tiger. We're already not exporting to them.
I see the coming weeks as being a series of customized deals with the smartest countries, one by one. I'm betting Japan and South Korea are very early in that process. And as soon as one of those major players makes a deal -- and by "deal", I mean opening their markets to American goods on the same basis under which we import from them -- the markets spring back to life and return to their former levels.
So my 401(k) is just fine to leave alone and not get all bothered about it.
It may be a 201(k) for now, but is more likely to be a 501(k) soon enough.
Copyright 2025 by Robert Sutton. Like what you read here? There are over 1,000 posts from Bob at www.uberthoughtsUSA.com and, after four years of writing a new one daily, he still posts thoughts once in a while as "visiting columns", no longer the "prolific essayist" he was through 2018, but still around. Appearance, advertising, sponsorship and interview inquiries cheerfully welcomed at bsutton@alum.mit.edu or on Twitter at @rmosutton.
So this was posted about six weeks ago, and my "201(k)" has since returned to its highest level because, well, all the stuff I wrote above. I'd love it if people would save this memory before doing stupid things with their long-term savings, because panic only satisfies the wolves who scoop up assets sold by the weak at depressed prices at times like those. When are we going to teach basic economics in high school?
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