Trump’s Transactional Approach to US Tariffs

Investing.com — There’s a growing belief that President-elect Donald Trump will adopt a transactional approach to US import tariffs, according to a Macquarie strategist on Tuesday.

Macquarie stated that this perspective has been mirrored in recent trading sessions, where traders have favored foreign stocks over US stocks.

The shift in focus may be attributed to the recent increase in UST yields, causing some traders to question the high valuations in US stock indexes and explore other options.

Another potential factor is the Wall Street Journal’s report on a flexible US import tariff policy. Trump denied the report, labeling it as ‘fake news’, yet it has resonated with many traders.

The weakness of the US dollar, evident in yesterday’s session, has continued into today’s trading, suggesting that traders remain unconvinced by Trump’s denial and are open to the notion of a more lenient international policy agenda under his administration.

The Macquarie strategist believes Trump is likely to adopt a transactional stance. They suggest he would prefer to secure concessions from US allies rather than impose sanctions, viewing such concessions as political victories.

However, the strategist predicts limited scope for this transactional approach with China, expecting punitive tariffs due to viewing China as a strategic competitor or a threat to the US.

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