Home Insights Macro views Expert perspectives: ‘Liberation Day’ tariffs unpacked
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Expert perspectives: ‘Liberation Day’ tariffs unpacked

April 4, 2025 | 5 min read
George Maris, CFA
Chief Investment Officer, Global Equities
Michael Goosay
Chief Investment Officer, Global Fixed Income
Rich Hill
Global Head of Real Estate Research & Strategy
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Equities

George Maris headshot
George Maris, CFA
CIO, Global Head of Equities

The dramatic nature of these tariffs and lack of ready softening measures implies equities will likely be in risk-off mode until something catalyzes change. While markets priced in tariff risk, the actual measures announced are more severe than expected and future actions remain uncertain. This ambiguity, combined with the stagflationary nature of the shock, limits the Fed’s ability to offset with policy support removing a pillar of potential market resilience.

We may be nearing peak uncertainty. There is an optimistic scenario where tariffs are a negotiating tactic intended to build credibility and pave the way for fiscal stimulus. This may be via tax cuts especially tied to on-shoring or a market-driven reduction in rates. If paired with tighter immigration policy, this could support real wage gains at the lower-income cohort and incentivize pro-cyclical responses from foreign economies (e.g. China & Germany). But this outcome requires policy clarity and we are not there yet.

Until a credible resolution emerges, either through de-escalation or fiscal offset, the market is likely to be defensive. Rising costs, limited visibility and uncertain policy path argues for caution in equity positioning. In this backdrop, companies with strong free cash flow generating capabilities remain attractive.

 

Fixed Income

Michael Goosay headshot
Michael Goosay
CIO, Global Head of Fixed Income

The latest tariff actions signal a more substantial and sustained shift in policy—this is not a negotiating ploy, but a structural decision to raise revenues through trade friction. While not an outright recession call, the path ahead looks increasingly stagflationary: slower growth, upward pressure on unemployment, and persistent inflation.

The Fed will likely be forced to cut despite inflation remaining above target, with markets now inching toward pricing a fourth cut in 2025. A material weakening in labor markets could prompt a faster, larger move—potentially a 50bp cut. For fixed income investors, this environment calls for selectivity, patience, and a willingness to take advantage of dislocations.

High-Quality Credit as Core Exposure
Spread widening has already begun, and more may follow as markets digest weaker earnings and margin pressures. But in a no-recession, low-growth environment, defaults are unlikely to spike. We are focused on up-in-quality credit—investment grade issuers with strong free cash flow and balance sheet resilience. This is the ballast in portfolios while volatility persists.

Opportunistic in Spread Assets
If we are approaching peak tariff escalation, this could mark an attractive entry point into spread products. We favor focusing on industries and companies that may benefit from this new regime and in segments of the curve where you have positive carry and structured credit, with a bias toward senior tranches and areas with strong collateral performance.

Maintain Liquidity & Flexibility
Uncertainty around policy, inflation, and labor data argues for keeping dry powder. Liquidity is not just a risk management tool—it’s an opportunity enabler. Being able to move quickly when spreads overshoot or curves shift is critical.

Reconsidering Duration
We have extended duration, particularly in high-quality sovereigns and rates markets with a yield curve steepening bias. If the Fed front-loads easing, intermediate parts of the curve could outperform. Longer term we continue to see balanced risks in the interest rate market and are focused on the near-term employment picture on managing this long duration view.

Look for Policy-Driven Dislocations
As fiscal stimulus (e.g., onshoring incentives, targeted tax cuts) and deregulation come into view ahead of the election cycle, markets may experience sharp, sentiment-driven moves. These create pockets of opportunity for active managers, especially in sectors aligned with domestic capex, infrastructure, and reindustrialization themes.

In this market, fixed income investors don’t need to be fully risk-off—but they do need to be fully selective. The mix of rising policy asymmetry, tactical dislocations, and idiosyncratic credit stories creates fertile ground for active allocation—provided you stay high-quality, high-conviction, and highly-liquid.

 

Real Estate

Rich Hill headshot
Rich Hill
Global Head of Real Estate Research & Strategy

The U.S. real estate market entered 2025 from a position of strength bolstered by lower interest rates, durable cash flows, and well-capitalized balance sheets. These characteristics position many sectors to weather the economic friction introduced by the recent tariffs announcement, especially as new construction becomes less attractive given higher costs. While tariff-driven uncertainty has the potential to slow broader economic growth, real estate valuations—already down ~20% from 2022 levels due to prior rise in long term rates – reflect much more of this risk than other asset types. This repricing provides a meaningful cushion, particularly as liquidity returns to the real estate debt capital markets.

The public equity markets are a leading indicator, and listed REITs are signaling improving sentiment, with year-to-date total returns of +3.3% (as of February 2, 2025), outpacing the S&P 500 by 655bps and the NASDAQ by 1,198bps. This marks the strongest relative start to the year versus the S&P since 2014 and the second-best start versus the NASDAQ since 2004—highlighting REITs' role as early-cycle outperformers.

The impact of tariffs is likely to be uneven across property types. Given their exposure to global supply chains, consumer sentiment, and cross-border travel, industrial, retail, and hotels face more acute risks. In contrast, secularly supported sectors—such as senior housing, single-family rentals, and digital infrastructure (e.g., cell towers)—are better positioned to absorb economic dislocations.

Foreign capital flows into U.S. private real estate may moderate amid heightened geopolitical and policy uncertainty. However, international buyers have accounted for only ~8% of acquisitions and ~6% of dispositions over the past five years. As such, even if foreign investors rebalance portfolios away from the U.S., we expect only a marginal impact on net acquisition activity.

European listed REITs are also outperforming their broader equity benchmarks, supported by defensive sector leadership and declining bond yields. Still, the region faces a more complex policy backdrop, where incremental fiscal spending could drive up growth expectations and interest rates. As in the U.S., strong fundamentals—resilient earnings, solid balance sheets, and improved access to capital markets—are supportive for Europe. However, any policy-driven yield volatility could serve as a headwind relative to the U.S., particularly for interest rate–sensitive sectors.

Macro views
Equities
Fixed income
Real estate
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Risk considerations
Investing involves risk, including possible loss of principal. Past Performance does not guarantee future return. All financial investments involve an element of risk. Equity investments involve greater risk, including higher volatility, than fixed-income investments. Equity markets are subject to many factors, including economic conditions, government regulations, market sentiment, local and international political events, and environmental and technological issues that may impact return and volatility. International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards. Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline. Real estate investment options are subject to risks associated with credit, liquidity, interest rate fluctuation, adverse general and local economic conditions, and decreases in real estate values and occupancy rates.

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