For financial advisers and professional investors only – not for distribution to retail investors.
April 15, 2025
By Daniel McCormack
Key takeaways
- Recent changes to U.S. trade policy have triggered sharp market movements, with tariffs on Chinese imports rising significantly even as implementation of the reciprocal tariff regime is delayed.
- Private Infrastructure and energy transition assets remain resilient, supported by inflation-linked revenues and improving cost competitiveness
- Monetary policy and fiscal responses will be critical in determining the outlook for growth, inflation and asset performance across markets.
What happened
The volatility in U.S. trade policy in recent days has caused notable swings in market sentiment and asset prices. Markets initially rallied following the Trump administration’s announcement that it would delay the implementation of new reciprocal tariffs for 90 days. However, the same announcement also confirmed a sharp increase in tariffs on Chinese imports, rising as high as 145%, alongside a 10% tariff on all other imports.
Despite the delay, our calculations suggest the weighted average tariff rate (WATR) on U.S. goods imports remains in the 20 - 25% range, up from 2.4% in 2024. While Chinese imports are now facing much higher tariffs, some other countries have seen reductions, resulting in a minimal net change in the overall WATR. However, the situation remains exceptionally fluid and there is potential for further tariff reductions, particularly on Chinese imports.
Why it matters
We are likely entering a period of heightened macroeconomic and investment uncertainty. Macquarie Asset Management continues to monitor the situation closely, as different asset classes will naturally be impacted in different ways by the unfolding events.
In our view, private infrastructure, particularly those assets with inflation-linked revenues and pricing power, remains relatively well placed in the mini-stagflationary environment we may find ourselves in. Infrastructure assets provide essential services and tend to be relatively stable even during periods of macro volatility. Many of these assets benefit from regulatory or monopolistic structures that support pricing power and margin stability.
While there is a risk of short-term disruption to some of the components involved in energy transition, asset owners have generally been able to pass on cost increases and maintain margins. Importantly, over the medium-term, scale and efficiency improvements are expected to make these assets become the cheapest source of power on a levelised cost of electricity basis. As a result, we continue to see strong support for energy transition infrastructure as among the most cost-effective solutions to meet surging global power demand, driven by rapid digitalisation, changing demographics shifts and widespread electrification.
What this means for investors
Periods of rising uncertainty often highlight the defensive qualities of real assets. Infrastructure and energy transition investments, in particular, can offer resilient income streams and inflation protection, along with long-term thematic support. We believe these assets are likely to remain attractive even in the face of short-term policy swings.
Real estate may also offer selective opportunities for investors. While the asset class remains closely tied to growth and interest rate dynamics, some sectors are benefiting from tight supply-demand fundamentals and rental growth. Should interest rates fall, real estate could be relatively well positioned, although outcomes will likely vary across regions and sectors.
Government debt and low-risk credit may also hold up well, particularly if central banks ease monetary policy in response to weakening growth. The extent of likely easing depends on the inflationary impact of the tariffs as well as how economic growth is affected, and this will likely vary by region. Overall, however, these asset classes look relatively well placed to us.
Listed equities and high-risk credit could be more challenged, although much will depend on the evolving news flow and economic impact. While falling interest rates can support listed equities, their effect has historically been less significant than that of the economic cycle. Positive earnings revisions can also provide support, although earnings tend to correlate with economic growth.
Macquarie Asset Management continues to monitor developments and evaluate the implications across portfolios. We will provide more fund-specific and portfolio company assessments in the near term as they materialise.