Are we past peak hawkishness on tariffs? Wolfe Research weighs in Investing.com -- It has been a week since the Liberation Day tariffs triggered shock and awe across markets, but Wolfe Research says we may be past peak hawkish trade rhetoric, though it warns that the ride will remain bumpy "It is plausible that we could be past peak hawkishness in trade rhetoric, but we caution against expecting that it will be a straight line up from here," Wolfe Research analysts wrote in a note Friday. Wolfe believes that despite the market’s shock after the recent Liberation Day tariffs, there are early signs of a shift toward more active negotiations. The Trump administration has indicated that it is set to begin tariff negotiations with Israel and Japan. While chief dove Bessent initiated this tonal shift, Wolfe notes that a unified message across the administration would provide greater reassurance. Despite these early signs of flexibility on tariffs, the analysts cautioned against expecting a smooth path forward, noting there is still "a long way to go" and "a lot of open questions" about the extent and timing of tariff easing. Remarks from President Donald Trump on tariffs will be key to watch, as will the need to see consistent dovish messaging from key administration figures, including hawks like Navarro and Lutnick. Still, countries seeking tariff relief face high hurdles as Trump has outlined significant reductions in trade deficits as a prerequisite for deals—a factor Wolfe describes as potentially limiting. High-income Asian allies and countries with friendly leader-to-leader relationships—including Japan, South Korea, Taiwan, and India—are likely to take priority in trade negotiations compared with China and the EU. Even so, any relief from reciprocal tariffs is expected to be limited due to baseline 10% tariffs and other sectoral levies remaining in place. "We think the aggregate scale of relief will likely be limited," Wolfe said, pointing to baseline tariffs, sectoral tariffs, and fentanyl tariffs as creating "a very high floor for where tariffs will remain." For investors desperate for hopeful signs on tariffs, Wolfe urged caution against reading too much into recent rebounds in risk assets. "If we’re right that aggregate tariff relief will be limited, there will still be significant impacts on the economy, and that headwind will play out over time," they said. "Market stabilization may also give Trump permission to stand strong. After today’s bounce, we remain concerned about downside as we get into earnings," they added. Which stock should you buy in your very next trade? With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities. In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record. With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.

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