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Investing.com -- Traders are finding it difficult to interpret the trajectory of U.S. trade policy, according to analysts at Macquarie.
In a note on Tuesday, the firm stated: “Traders continue to struggle with understanding the direction that the US’s trade relationships with the rest of the world are going in.”
Barriers to clarity include evolving tariff policy, which Macquarie believes could shift from broad-based measures to more focused actions.
“The US might roll out new product-specific ‘strategic’ tariffs,” Macquarie analysts wrote, pointing to the new 50% steel and aluminum tariffs as “an exemplar of other strategic tariffs that are coming and likely to ‘stick’.”
Macquarie explained that “many of the reciprocal tariffs – by their nature – may be negotiated away in new ‘deals’ over time,” while “the ‘strategic tariffs’ being contemplated by the administration may likely replace the reciprocal tariffs in the headlines.”
They added, “One can still discern how market sentiment is being driven by trade and tariffs,” citing short-term moves in the dollar and equity markets in response to recent tariff announcements and legal rulings.
Macquarie also noted that President Donald Trump “has long made the connection between onshore production of ‘strategic products’ and national security.” In steel, they said, Trump has argued that “if you don’t have steel, you don’t have a country.”
Underlying economic conditions remain murky. “The OECD’s new global GDP growth projection for 2025 was downgraded (to 2.9% from 3.1%) precisely because of the tariff outlook,” the firm noted.
They added that weak data from China, the Euro area, and the U.S. “has also been attributed to the general slowdown in demand emanating from generalized uncertainty around US policymaking.”