Key insights
- A Wolfe Research strategist highlights that the easing of US tariffs has been an underappreciated tailwind for domestic growth, driven by policy shifts on China and India, and legal rulings. While the effective tariff rate has fallen significantly, the strategist anticipates a modest return of tariff headwinds by late 2026. This suggests a currently supportive, though potentially shifting, trade policy environment for US equities.
Investing.com -- With geopolitical attention focused on the U.S.-Iran conflict, Wolfe Research strategist Tobin Marcus turned back to domestic policy in a new note addressing top investor questions on tariffs, trade negotiations, and related economic dynamics.
In the first part of a series of notes, Marcus focused on tariffs, telling investors that the outlook has shifted more than markets may appreciate. The U.S. effective tariff rate on all imports has fallen sharply from a peak of 10.9% in October to 6.8% in the most recent March data.
"The tariff headwind has eased materially this year, to an extent investors may not fully appreciate," Marcus wrote, attributing the decline to policy changes on China and India, growing evidence of evasion, and the Supreme Court's ruling against the administration's IEEPA tariffs.
Wolfe Research believes tariff easing has been an underappreciated support for U.S. growth alongside AI-driven capital expenditure and consumer tax cuts from the One Big Beautiful Bill.
"Tariff easing has been a below-the-radar factor supporting US growth more broadly," Marcus wrote.
However, the administration has now proposed restoring permanent tariffs under Section 301, issuing a proposal for a rate floor that Wolfe expects will be followed by higher country-level rates on key trading partners.
Marcus said renewed headwinds are likely later in 2026, though modest in scale. "It's unlikely that they'll ramp up high enough to derail growth," he added.