Self-Invested Personal Pensions (SIPPs) have become a popular way for many of us to gain a little control over our retirement pot. But could the threat of tariffs cause our pensions to struggle?
There are many advantages to taking out a SIPP. Its tax efficiency means that you are afforded more flexibility and a hands-on experience when it comes to building your wealth ahead of retirement.
But because your personal pension is an investment that can incorporate a range of assets like shares, bonds, and property, the impact of the tariffs announced by President Trump could have a damaging impact on the money you make.
Even though Trump’s tariffs primarily affect the United States, the global impact of these trade levies can disrupt UK markets. With many of our pensions linked to Wall Street stocks to varying degrees, trade disruption can have a considerable impact on the performance of pension funds.
The great thing about SIPPs is that they’re tax-efficient. This means that you don’t have to pay capital gains or income tax on your investments as you build your SIPP pot, and governmental tax relief top-ups of 25% on personal contributions mean that many pensions remain resilient even during periods of market uncertainty.
However, President Trump’s announcement of ‘reciprocal’ tariffs on the 2nd of April 2025 saw Wall Street’s S&P 500 index tumble more than 12%, a rate that could severely undermine the performance of pensions.
In the United Kingdom, the FTSE 100 also fell more than 10% following the announcement of tariffs, but both indexes in the US and UK have since recovered after the President implemented a 90-day delay to the trade levies.
Although Trump has been willing to grant reprieves to his stern tariffs, the President has continued to threaten damaging charges to trading partners. In May, Trump threatened a 50% tariff on the European Union, showing that investors may have to brace themselves for long-term volatility caused by these changes to international trade.
With the initial 90-day delay to tariffs due to expire in July, our pensions could be subject to more uncertainty in the weeks ahead, but are our investments safe from Trump’s tariffs?
Should SIPP Investors Be Worried?
Tariffs have an international impact on markets because they make it harder for nations to trade. This means that pensions that are focused on stocks and shares can struggle to grow at the same rate.
Companies that are affected by tariffs may experience weaker growth and slimmer profit margins, making their share prices fall.
The significant market downturn in the wake of the announcement of tariffs reflects the fear that swept through global stock exchanges, and similar shocks are likely to be felt should new tariffs come into play in the future.
Many pensions will be affected by the ‘Magnificent Seven’ collective of US tech stocks like Apple, Amazon, Meta, Google’s parent company Alphabet, Tesla, Nvidia, and Microsoft. These stocks account for roughly one-third of the S&P 500, meaning that their market movements carry a significant impact that can even affect SIPPs that aren’t focused on the stocks themselves.
The Magnificent Seven are particularly vulnerable to tariffs due to many of the stocks having a significant presence overseas, with firms like Apple and Amazon depending on trade with China for their supply chains and manufacturing.
Despite this, Helle Dalsgaard, chief advisor at Sampension, has suggested that it’s important for SIPP investors to avoid panicking despite tariff uncertainty.
Dalsgaard has pointed to the historical habit of markets correcting themselves after suffering downturns.
Since the year 2000, the United States has experienced three recessions, and the S&P 500 has recovered to trade at an all-time high in 2025. Although Trump’s tariffs are a unique hazard for investors because they’re a self-made threat to markets, history tells us that markets generally recover.
Measures to Take for Investors
If you’re concerned about your SIPP’s ability to grow in the wake of Trump’s tariffs, adopting a more diversified approach is often a great way to add some resilience to your pension pot.
Look to incorporate stocks that perform well in a recession, such as budget stores and healthcare, and look to alternative investment options, such as real estate and bonds, to boost your revenue diversity.
For most investors, you can be reasonably confident that your pension will recover over the long term despite the disruption caused by tariffs. However, if you’re looking at accessing your SIPP within the next five years, you may need to reassess your financial goals and whether or not withdrawing early could help to better support your needs.
It’s difficult to know which way the markets will turn with the threat of tariffs continuing to loom over pensions. So, if you’re unsure of what to do about withdrawing your money in the months ahead, it’s worth seeking the help of a financial advisor who can make a judgment based on your needs.
It may seem like tariff uncertainty is here to stay in the short term, but you don’t have to let volatility disrupt your SIPP. With the right preventative measures and an investing outlook, you can continue to build your retirement pot without the threat of tariffs creeping in.
