Billionaire Ken Griffin Says Trump's Tariffs Have Made the U.S. "20% Poorer." Here's What You Can Do to Prevent Further Wealth Erosion.

Yahoo

01-05-2025

GOP supporter Ken Griffin believes that Trump's tariffs have made the U.S. "20% poorer in four weeks."
While Griffin's 20% figure is hard to substantiate, the issues he pointed out with the White House's trade policies are real.
Investors can take several steps to protect their wealth, including buying international stocks and Treasury Inflation-Protected Securities (TIPS).
Billionaire Ken Griffin is a major supporter of President Donald Trump and donated $100 million last year to conservative groups. However, Griffin isn't a fan of all the president's policies.
He recently told Semafor's Gina Chon at the World Economy Summit that Trump's tariffs have made the U.S. "20% poorer in four weeks." Griffin has stated in the past that no brand compares to U.S. Treasuries. However, he believes the White House has "put that brand at risk." The hedge fund manager added, "It can be a lifetime to repair the damage that has been done."
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Griffin's comment about the U.S. being 20% poorer as a result of Trump's trade policies appears to reference the strength of the U.S. dollar relative to the euro. A weaker dollar can reduce consumers' buying power by making imported products and international travel more expensive.
Tariffs can fuel inflation directly as importers pass their higher costs to American consumers. Retaliatory tariffs from other countries can hurt U.S. exporters and potentially lead to job losses in the impacted industries. Uncertainty created by trade wars can also reduce the global demand for U.S. Treasuries. This uncertainty can also cause the prices of many stocks to decline.
But Griffin's 20% figure is suspect. The U.S. dollar has fallen around 10% relative to the euro this year, a steep decline that could negatively impact Americans' buying power in some ways. However, that's only half the number Griffin mentioned.
The demand for U.S. Treasuries appears to have weakened somewhat, but not at an alarming rate. Also, while the S&P 500 (SNPINDEX: ^GSPC) (a good proxy for the overall stock market) is in correction territory, it has partially rebounded.
Although Griffin's statement that the U.S. is "20% poorer" is hard to substantiate, tariffs have caused many Americans to be less wealthy than they were just a few months ago. If steep tariffs remain in effect, inflation could rise and reduce consumers' buying power even more.
What can you do to prevent further wealth erosion? Here are four steps to take.
Diversifying your portfolio, in general, is always a wise strategy. With the potential for further weakening of the U.S. dollar and lower demand for U.S. Treasuries, including international stocks in your investment portfolio could be a good move.
A quick look at Vanguard's exchange-traded funds (ETFs) reveals that nine of the top 10 performers year to date are international funds. That's not surprising considering the global market dynamics caused by the Trump administration's trade policies.
To protect your money against the corrosive effects of inflation, you might consider buying Treasury Inflation-Protected Securities (TIPS). If your principal invested in these Treasury securities goes up over time, you get the full increase adjusted for inflation. If the principal declines below the original amount invested, you still get the original amount.
Precious metals tend to be good inflation hedges and can also rise during times of uncertainty. We've seen this happen so far in 2025 with the price of gold jumping while the stock market fell.
Investing in precious metals could be a reasonable move for investors to take to prevent further erosion of their wealth. You could purchase physical gold or silver, including coins and jewelry. Another option is to invest in funds that own precious metals, such as the iShares Gold Trust. Or you could consider investing in a top gold miner such as Barrick Gold.
Buying stocks that are likely to be highly resistant to the negative effects of tariffs could also be helpful.
Many consumer staples stocks tend to be relatively tariff-resistant and hold up well during economic downturns. For example, The Coca-Cola Company is a blue chip stock that many investors find attractive during uncertain times as people keep buying soda even when times are tough.
Utility stocks are another good alternative as power demand doesn't always dip with the economy. Dominion Energy, which provides electric power to Virginia, North Carolina, and South Carolina, is one utility stock to consider.
It's also important for investors to stay alert to potential market dynamic changes. For example, the permanent lifting of tariffs or steep reductions in tariff rates by Trump could change things considerably. The assets that perform best during periods of uncertainty usually aren't the best ones to own when the uncertainty fades.
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Keith Speights has positions in Dominion Energy. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.
Billionaire Ken Griffin Says Trump's Tariffs Have Made the U.S. "20% Poorer." Here's What You Can Do to Prevent Further Wealth Erosion. was originally published by The Motley Fool