By now retirees and investors will be well aware of the trauma US President Trump’s tariffs are causing to their investments. Many super fund members may not be as aware that their accounts have also been seriously affected. The values of most super accounts have suffered a sharp fall.

The default investment options of most large super funds hold seventy to eighty per cent of their money in market linked assets such as Australian and international shares, so their values are down. Only accounts invested entirely in cash and fixed interest are unaffected.

The last time the US tried tariffs like this was in the 1890’s. They didn’t achieve the desired results and were dismantled over the following years. Trump’s view of the how economics works is seriously flawed, yet he seems very determined to persist with it.

It seems likely that there will be more volatility over the months ahead. It won’t all be bad news, there will be positive days, but the near-term outlook for investments could be negative.

How should investors and super fund members respond? Those with diversified portfolios partly invested in defensive assets such as cash and fixed interest will be affected less.

People who are long term investors not needing to sell for years need do nothing. Values always recover in time and go on to new highs. People who will need to sell part or all of their investments in the short to medium term may be best to switch to cash now. Values could fall further near term.

For long-term investors this may be a good buying opportunity. After heavy falls a week ago there has been a partial rebound, with bargain hunters active. This may provide a floor.

If a farmer needs to buy more livestock when prices have recently fallen sharply, he doesn’t stress about the fact that the livestock he already has on his farm have fallen in value. He focuses on the opportunity to buy the extra stock he needs at low prices.

Many shares that are considered to have strong growth potential long-term have fallen sharply in price. These include many major US technology companies for example. Buying them, or managed funds that invest in them, now, could be a smart move for long term investors.

Tariffs and trade wars are bad news. They slow international trade and economies, and raise inflation. However they won’t destroy the global economy. Four-fifths of international trade does not involve the US. Eventually economies and share markets will recover and the tariffs will be wound back.

Investors should exercise caution for a little while but then look for buying opportunities.