As President Donald Trump’s tariffs continue to roll out, investors are bracing for changes. The majority of investors (90%) expect the tariffs to extremely or somewhat affect the economy this year, according to Moomoo’s Midyear 2025 Investor Survey.
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In anticipation of these economic shifts, many investors are making adjustments to their strategies, including reducing their risk levels and buying or selling stock. Here’s a look at how investors are responding to tariffs, and how these shifts may or may not pay off.
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Shifting to Safer Investments
The most common reaction investors have to Trump’s tariffs is reducing the level of risk in their portfolios. According to the survey, 40% of investors are taking a more cautious approach and shifting their investments to less risky securities.
“Ninety percent of our clients said they expect tariffs to impact the economy, and if that is your view, then it makes sense to be a touch more cautious,” said Neil McDonald, Moomoo U.S. CEO.
This could mean rotating out of highly leveraged products or aggressive trading options, and investing in more value stocks.
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Buying the Dip During Market Volatility
Trump’s tariff announcements have caused wild swings in the market, and some investors have been taking advantage of the downswings. Nearly 1 in 5 investors (18%) used sell-offs to buy more stocks.
While this strategy can pay off, it’s important to do your research before adding to your portfolio.
“We do have more active clients who have used every dip to commit more money to the marketplace, and they’ve often done well,” McDonald said. “Retail [investors] tend not to trade [based on external] noise too much. They’ve been trading long enough that they understand that they’re going to have 10%, 20% dips, you’re going to have sell-offs and panics, and they [use these opportunities] to buy more.”
Selling Off Holdings Amid Uncertainty
On the flip side, some investors (10%) are planning to or have already sold all of their stocks as a reaction to market volatility. While panic selling isn’t always the best investment move, it may be a necessary one.
“It’s down to personal circumstances,” McDonald said. “People are having to sell stocks because they’ve lost their job, they’ve got to pay their car loans, they’ve got to pay their student loans. That’s absolutely understandable.”
Sticking to Long-Term Strategies
While many investors are making changes to their investments in response to tariffs, nearly one-third are continuing on with their current strategy — 32% of investors said they have not changed their strategy at all.
“We have a lot of clients who do dollar-cost averaging, putting in money every single month, and that kind of strategy over the past two, three years, it’s really paid off,” McDonald said. “If you’d have sold any of the dips, you’d have missed a lot of return.”
Investing consistently typically has better results than trying to time the market based on external factors like tariffs.
“You have to get two things right in trading — you have to get direction right and timing right,” McDonald said. “To get them both right at the same time, that’s almost impossible.”
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This article originally appeared on GOBankingRates.com: 4 Ways Investors Are Responding to Tariffs — and What They Should Be Doing
