US President Donald Trump's tariff war is likely to be "pretty ugly" for New Zealanders' KiwiSaver balances, providers are warning - but the impact may not last.

Trump enacted tough tariffs on the US's largest trading partners - China, Canada and Mexico - on Wednesday (NZT), sparking retaliatory tariffs from all three countries.

That prompted sharemarkets to become volatile. As of Tuesday midday in the US, the S&P 500 had erased most of its gains since Trump's reelection in November. The benchmark index on Tuesday plummeted below its 125-day moving average, signalling investors are skittish, according to CNN's Fear and Greed Index.

Rupert Carlyon, founder of Koura KiwiSaver, said it could mean tough times ahead for some New Zealand investors.

"In the short term, it's likely to be pretty ugly. I think when he's looking to up-end the global trading system and looking to make pretty hefty changes, equity markets are reacting badly. The question is how much longer they react badly for."

He said balances would probably start to noticeably fall for New Zealand investors by the end of this week.

"In saying that, most KiwiSavers should be looking at it over the medium term. We are still very firmly of the view that he's not out to commit political suicide and still wants to protect the US economy and global economy.

"Over the medium term, it will be fine but there will be very scary moments on the way through."

He said KiwiSaver members would probably be better off not looking at their balances, and not reacting to the news.

"You've got to take a long-term view. The problem at the moment is that no one really knows what's going on."

Trump was hard to predict, he said, which created uncertainty that could change or delay people's investment decisions.

"That has the potential to cause economic damage. It would be nuts to make decisions based on what we are seeing at the moment because we have no idea what tomorrow's decision is going to be."

Mike Taylor, founder of Pie Funds, said US stocks had a "bit of a rough ride" over the past week to 10 days. The broader S&P500 index had corrected about 5 percent.

But he agreed with Carlyon that Trump would have an eye on the US economy.

"Trump is a proponent of the art of the deal. One of the things he wants is strong economic growth. I would suspect that if this starts to have a more meaningful impact on economic growth or inflation, even if the stock market falls further, he might change his tune a bit."

Tariffs would slow economic growth and put up prices, which was what had prompted the market to fall. "But Trump being Trump, he won't want to see the market fall, that's bad for his ego."

Dean Anderson, founder of Kernel Wealth, said there had been a silver lining for New Zealand investors - "the strengthening USD has provided a buffer against US market volatility. Those with unhedged USD exposure have seen better returns in NZD terms - a timely reminder of currency dynamics as we mark 40 years since floating the NZ dollar.

"This period serves as a powerful reminder about diversification's value. While recent years have spotlighted the Magnificent 7 tech stocks, and Elon Musk continues to generate headlines with Doge, flowing through to Tesla volatility, broadly diversified portfolios are proving their worth. Many major indices remain positive this calendar year, highlighting how diversification can protect investors from individual stock movements.

"For KiwiSaver investors, this reinforces a key principle: if you're in a well-diversified portfolio that matches your investment horizon and risk profile, and your personal circumstances haven't changed, stay the course."

He said it was also a reminder that asset class diversification was crucial.

"Those closer to needing their investment typically have higher allocations to cash and fixed income, which help smooth out market volatility.

"Infrastructure investments are particularly interesting right now, as they often perform well during inflationary periods. While perhaps less exciting than high-profile tech stocks, these 'boring' assets are proving their worth. Moreover, infrastructure assets are increasingly relevant to the tech revolution - from data centres to electricity networks needed for AI development. This demonstrates that successful investing isn't about chasing headlines - it's about maintaining a balanced, diversified approach aligned with your investment timeframe."