Trump’s Tariff Gambit: A Short-Term Cool-Off for Long-Term Heat
As the latest wave of US tariffs begins to take place, early signs of economic impact are becoming clear. While the Trump administration’s plan was meant to boost domestic production and reduce trade imbalances, markets and recent data are telling a different story. Short-term effects are becoming visible in the economy, as shown in the latest indicators — from shifting supply chains and potential weakening of consumer demand to early signs of rising unemployment, widening trade deficit and growing investor's hesitation towards new deals
Recent economic data from late May to early June offer further insight into how these trade dynamics are affecting the US economy.
Weakening consumer demand is becoming more evident, with the ISM Services PMI falling to 49.9 in May — below the neutral 50 mark, signaling a decline in the services sector, which represents the majority of US economic activity.
Early signs of stress in the labor market are also becoming visible. Initial jobless claims rose up to 247,000, marking the third consecutive month of increases, while ADP private-sector employment showed a gain of just 37,000 jobs in May — well below expectations. On the corporate side, Procter & Gamble announced plans to cut 7,000 jobs, highlighting growing caution among large employers.
Investor uncertainty is becoming more visible, as US M&A activity has fallen to a 20-year low — a clear sign of how trade policy risks are reshaping corporate priorities. Concerns over prolonged tariff disputes and legal challenges are prompting many firms to cut investment and delay important decisions.
In conclusion, while recent economic data point to a gradual cooling, the latest NFP results and stable unemployment rate show that the economy is adjusting, not weakening sharply. As the labor market remains resilient, this phase may act as a constructive pause, giving the economy time to adjust and prepare for more balanced growth
With this macroeconomic backdrop in mind, it is worth examining how key markets such as S&P500 are responding from a technical perspective.
In early February 2025, the trend structure broke on the weekly timeframe, and over the next two months, price cleared key liquidity levels built up since January 2024.
To keep the chart clean, I’m marking all these liquidity levels as trendline liquidity.
In early April 2025, U.S. President Donald J. Trump announced a new tariff policy. However, after assessing the potential market impact, the administration decided to postpone its implementation by 90 days on April 10th.
This decision immediately reflected in the markets, triggering a strong bullish impulse on the S&P 500. As a result, we saw a new break of structure to the upside on the weekly timeframe in early May 2025 (highlighted in green).
With the weekly structure in mind, daily timeframe reveals a similar developing pattern.
To keep the chart clean, I’m marking all these liquidity levels as trendline liquidity.
If this structure plays out in the same way as it did on the weekly, we could see another BOS here, with price targeting the trendline liquidity below.
To define a potential target area, I used the Fibonacci retracement on the weekly timeframe.
If the daily BOS confirms, I’ll be watching the 0.618–0.784 zone as a magnet for price.
In summary, while short-term uncertainty remains, the higher timeframe trend continues to favor further upside and potential new all-time highs.
In my current outlook, a confirmed daily BOS followed by a healthy pullback into the 0.618–0.784 zone would provide an ideal setup for a potential move towards a new ATH.
Price action around these levels will play a key role in validating the bullish continuation scenario. Moreover, with the revised tariff implementation now scheduled for July 8, the trajectory of trade negotiations and upcoming macroeconomic data will likely influence market sentiment in the coming weeks.