How Tariffs May Impact Maximus Employees and Retirees

'Maximus employees should recognize that while U.S. tariffs may cause short-term market fluctuations, maintaining a diversified investment portfolio remains essential to managing long-term risks and ensuring financial stability amidst economic uncertainty.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'Maximus employees should consider that while tariffs may influence market volatility, strategic diversification across various industries and geographies can provide resilience and help protect retirement savings from potential disruptions.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

The impact of U.S. tariffs on international trade and economic policy—how tariffs affect trade relations with China, Mexico, and Canada and their implications for border policies and industry regulation.
Market volatility and investment strategies—the influence of tariffs on financial markets, economic growth, and strategies investors can use to manage risk.
Historical and future implications of tariffs—a look at past tariff policies, their effectiveness, and the potential long-term consequences for businesses and retirement planning.

Imports from China have been subject to tariffs imposed by the United States and they are considering extending those measures to imports from Mexico and Canada as well. This move targets trade, border policies, and drug trafficking policy conflicts. Essentially taxes on imported goods and services, these tariffs are designed to force other countries to change their policies. China responded with tariffs on some American imports and a 30-day moratorium on duties for Mexico and Canada, which was announced on February 3 as talks continue.

The maze of international trade laws and tariffs might affect economic growth, the stock market, and industries such as energy. Whether exemptions will be granted or how long the tariffs will remain is unclear. Also, fluctuations in currency exchange rates might affect import prices in the United States.

Market Volatility & Economic Considerations

Financial markets have historically been more sensitive to business profitability and the health of the U.S. economy than to short-term government policies. Uncertainties about tariffs temporarily affect the markets but fundamental economic factors remain critical. A diversified investment portfolio is prudent during such periods, institutional portfolio manager Naveen Malwal said. A balanced strategy should contain investments across geographies and industries and exposure to global equities and bonds.

Historical Perspective & Tariff Implications

Governments have historically used tariffs to advance national interests, adjust foreign government policies, and support domestic industries. Following World War II, the General Agreement on Tariffs and Trade (GATT) cut world tariffs dramatically to promote international commerce. But in the past decade, some governments have rethought the benefits of free trade, raising tariffs to help domestic industries. The International Monetary Fund says that since 2012, there have been 2,845 additional tariffs placed on the world.

Tariffs do a number of strategic things, such as drive consumers to domestic alternatives if they pay more for imported goods. Anti-dumping tariffs create fair competition by addressing foreign trade practices that disadvantage domestic industries.

The US Tariff Policy & Its Impact

US tariffs have often influenced trade - beginning with duties on imported sugar in 1789, and growing over time. In 2018, the U.S. placed tariffs on USD 360 billion of Chinese imports over trade policy and intellectual property concerns. Many of those tariffs remain and additional levies on another USD 18 billion in Chinese imports are expected in subsequent years.

Economic Effects of Tariffs

Though importing companies pay tariffs directly to government agencies, the financial burden often is passed on to consumers in higher prices. But in the past decade, rising inflation has not been a consistent result of U.S. tariffs. For instance, when Trump imposed tariffs on China in January 2018, U.S. inflation hit 2.9% before settling at about 2.5% prior to the pandemic.

Future Challenges and Considerations

The efficacy of tariffs is still debated. Tariff supporters point to jobs and growth of domestic industries. Criticism is that tariffs would eventually lead to higher production costs and consumer prices - and possibly lower employment levels.

Economic projections show proposed and existing tariffs could trim U.S. GDP by 1%. In addition, economists still weigh whether tariffs drive inflation.

Investment Strategies Amid Uncertainty

Traders are urged to look long term even as tariff uncertainty persists. Fidelity Director of Quantitative Market Strategy, Denise Chisholm, says historical trends indicate that tariffs cause market volatility, but conditions settle down eventually. Currently, large valuation spreads indicate market uncertainty and may present growth opportunities as the market adjusts.

When constructing portfolios, investors should consider their time horizon, risk tolerance, and financial objectives. An investment portfolio of equities, bonds, and short-term investments geared toward individual financial goals may help you remain resilient in times of economic uncertainty.

Tariffs on Retirement Planning

For Maximus employees approaching retirement, tariffs could affect investment portfolios - especially those with foreign assets - significantly. Tariffs could affect foreign investment return through impacting profitability and adding to market fluctuation. A March 2021 Brookings Institution report advises retirees to assess their retirement portfolio exposure to foreign markets and consider how to hedge against trade disputes risks. Diversifying investments across asset classes and geographic regions with differing trade policy exposure may hedge against risks of tariff-driven economic shifts.

How U.S. tariffs impact trade with Canada, Mexico, and China is important for evaluating their effect on investment portfolios, economic stability, and stock market performance. The history of tariffs, their use strategically to aid domestic industries, and their potential effects on world pricing and commerce are examined. For Maximus employees seeking financial consistency amid tariff-related economic shifts, diversified investment strategies remain a good strategy.

Articles you may find interesting:

Source:

1. Gertz, Geoffrey. 'Trump's 25% Tariffs on Canada and Mexico Will Be a Blow to All 3 Economies.' Brookings Institution , 4 Feb. 2025, brookings.edu.

2. Vanguard. 'Considering the Potential Impact of Tariffs.' Vanguard , 7 Feb. 2025, corporate.vanguard.com.

3. J.P. Morgan Global Research Team. 'Trump's Tariff Policy Leaves Markets Uncertain. Investors Should Focus Their Strategy on the Long Term.' J.P. Morgan , 6 Feb. 2025, jpmorgan.com.

4. Invesco. 'Tariffs Rattle Stock Markets, but What's the Long-Term Impact?' Invesco , 7 Feb. 2025, invesco.com.

5. Peterson Institute for International Economics. 'Trump's Tariffs on Canada, Mexico, and China Would Cost the Typical US Household Over $1,200 a Year.' Peterson Institute for International Economics , 3 Feb. 2025, piie.com.

What is the 401(k) plan offered by Maximus?

The 401(k) plan offered by Maximus is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

How can I enroll in the Maximus 401(k) plan?

You can enroll in the Maximus 401(k) plan by completing the enrollment form available through the HR portal or by contacting the HR department for assistance.

Does Maximus match employee contributions to the 401(k) plan?

Yes, Maximus offers a matching contribution to employee 401(k) plans, which helps to enhance your retirement savings.

What is the maximum contribution limit for the Maximus 401(k) plan?

The maximum contribution limit for the Maximus 401(k) plan is set annually by the IRS, and you can check the latest limits on the IRS website or through Maximus’s HR resources.

Can I change my contribution percentage to the Maximus 401(k) plan?

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You can start withdrawing from your Maximus 401(k) plan at age 59½, or earlier under certain circumstances such as financial hardship.

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Does Maximus provide investment options within the 401(k) plan?

Yes, Maximus provides a variety of investment options within the 401(k) plan, allowing employees to choose based on their risk tolerance and retirement goals.

How often can I change my investment allocations in the Maximus 401(k) plan?

Employees can change their investment allocations in the Maximus 401(k) plan as often as they wish, subject to the plan's guidelines.

What happens to my Maximus 401(k) plan if I leave the company?

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