Trading Renewal: higher tariff risk, not lower
Trade never sleeps. While the agreement between the US and several trading partners in early August gave hope for a calm certainty and more policies, the latest developments have shown that this hope is short -lived. Concerns of extreme development may be lost, but further trade risks and the escalation of tariffs remain tangible.
Many trade agreements that have hit in the last few months remain unbied, symbolic, or logistically and politically inappropriate. Just think about promises made by, for example, EU and Japan to significantly increase company investment in the US. As a result, the unilateral collapse or revision of all these agreements can easily trigger further escalation. So far, most US trading partners have delayed retaliation, but further escalation is likely to trigger tariff responses.
For business, uncertainty is paralyzed. Lack of clarity about the tariff policy to prevent long -term investment and complicate supply chain planning. Even if some tariffs are finally rolled back, a wider message is clear: the trade policy will remain an unstable arena and politically for the future.
Another factor that brings back uncertainty is the law. Recently, the legal foundation of several US tariffs has been studied intensely. Decision 7-4 by the US Appeals Court for the Federal Circuit states the use of administration of the International Emergency Economic Strength Act (IEEPA) to impose illegal tariffs. While the decision allows fixed tariffs in its place until October 14 to allow the potential for the Supreme Court’s appeal, it raises a serious doubt on the long -term feasibility of the current tariff regime.
If the Supreme Court upholds the decision, the government will be forced to spin to alternative legal mechanisms. This includes part 122 of the 1974 trading law, which allows temporary tariffs up to 15% (can be updated by the congress), and section 338, which allows tariffs up to 50% or direct import ban. This fallback option is more procedural and less flexible than Ieepa, has the potential to limit the administrative ability to respond quickly to trade development.
Overall, we still hold on to the scenario of our previous basic cases, anticipating that the average tariff level will continue to increase by almost 20%. Contrary to our previous trust, we no longer saw the US government resigned at the tariff in 2026 and so on. The benefits of the tariff for the US budget are too attractive. This is why we see the tariff level of almost 20% remaining to the entire term of US President Donald Trump. If there is, there is a higher risk risk, not lower.
Source: Ing
