What happened?
The US announced a set of “reciprocal tariffs” on a range of countries, based on what it believes to be the effective tariff rates that these nations impose on US goods, including factors like local sales taxes and alleged “currency manipulation.” In Australia, with which the US maintains a trade surplus, we will face a 10% tariff (the minimum rate). Goods manufactured in the US are exempt from these tariffs. There are also some temporary exemptions, including: steel and aluminium; automobiles and auto parts already affected by Section 232 tariffs; copper, pharmaceuticals, semiconductors, and lumber; and bullion, energy, and minerals not readily available in the US.

While President Trump did not provide a definitive timeline for the duration of these tariffs, he implied that they could remain in place indefinitely. This remains to be seen, and could be impacted by potential legal challenges and the outcome of upcoming elections.

Another uncertainty is how the affected countries will respond. Potential scenarios include retaliating by raising tariffs on US goods, prompting further US tariff increases. Another could see countries seeking to lower tariffs on US exports in exchange for concessions on their goods. At this point, the situation remains fluid and subject to change.

As a result of these changes, consumers in the US will face higher prices, leading to inflationary pressures. Further, global GDP growth could be stifled as profit margins come under pressure from increased costs.

That said, economics is rarely so straightforward. There are factors that could offset these challenges. For example, the US might respond with fiscal stimulus measures, such as additional tax cuts and interest rate cuts to support the economy. Furthermore, the tariffs could accelerate the “reshoring” of manufacturing, which has been one of President Trump’s key goals.

Inflation trends, Trump, and RBA policy decisions will play a critical role in shaping market performance across asset classes. Market volatility, particularly in reaction to policy shifts like tariff announcements, is a timely reminder of the crucial role portfolio diversification plays in mitigating risk. While short-term fluctuations are inevitable, a diversified portfolio can help smooth out the bumps and provide stability during periods of uncertainty. Like any other case of market volatility, we encourage a long-term view, understanding that market turbulence is a feature, not a bug, of investing.

Superannuation Security

We encourage you to consider additional steps that you can take to further protect your account login credentials. This includes changing your password if you are concerned that your login details may be known to someone else.

Visit the Australian Government’s cyber security site at cyber.gov.au for more tips to reduce the risk of fraudulent activity online.

Three aged care mistakes you should avoid

Rushing your decision

The biggest expense you will face is the cost of your room, which is likely to be quoted as hundreds of thousands of dollars. However, you might choose to pay a daily fee instead of the big lump sum.

When signing contracts, many people feel pressured to make quick decisions which might lock them into arranging a quick sale of the home. We recommend you take time to make an informed decision and understand your options. Your provider must give you 28 days after moving into care to decide how to pay. This gives you time to get advice and be prepared.

Focussing on just day 1

You need to know what fees you will be asked to pay on the first day of your stay in residential care. But this is just your starting point as your fees change over time.

Decisions you make after entry and changes to your circumstances can impact your fees. Make sure you get an understanding of what to expect over the following 2-5 years, with projections showing expected changes in fees, age pension, cash flow and asset values.

Filling-in forms incorrectly

Services Australia needs to review your financial position to calculate your fees. To enable this assessment, you need to complete some forms and update Centrelink (or Veterans’ Affairs) records.

If you don’t fill in the right form, or make mistakes with the information provided, your fees might be incorrectly calculated or cause long delays with the assessment.

Seek advice

Even if your situation seems simple, there are so many aspects to consider in working out the best financial strategy. The value of seeking advice from an accredited aged care adviser is peace of mind to ensure you have made the right decisions to generate enough cashflow while protecting the value of your estate.

If you want to talk through your options or find out more information for your situation, call our office on 07 3333 2187, or email luke@ethicalinvestment.com.au to arrange an appointment.