Why Trump's New Tariff Blitz is Different This Time
A new chapter in global trade wars begins.
1New Tariff Wave Begins
As the U.S. military conflict with Iran enters its sixth month, President Donald Trump has launched a new tariff blitz targeting 60 trading partners, including the European Union, China, the U.K., and Canada. The new tariffs, ranging from 10% to 12.5%, replace the temporary 10% baseline tariffs that expired on July 24. This move comes amid global economic challenges and an energy shock, posing a risk of lasting impact on markets.
2Market Reaction Remains Muted
The initial market reaction to the new tariffs has been limited. Investors anticipated the expiration of previous tariffs, so the move did not come as a surprise. This contrasts with the 'shock and awe' approach of the 'Liberation Day' tariffs announced in April 2025, which sent markets plummeting. However, the more challenging global economic landscape and a new legal framework suggest these tariffs could have a more lasting impact.
3Global Energy Shock and Supply Chain Issues
The Trump administration remains committed to tariffs despite the global energy shock and increasing supply chain bottlenecks. Emma Moriarty, portfolio manager at CG Asset Management, emphasizes the need to prepare for a low-growth, high-inflation scenario. Ongoing conflicts in the Middle East and oil prices rebounding above $100 further pressure the markets.
4Legal Framework Changes
Following the Supreme Court's February ruling that previous tariffs were illegal, the White House has adopted a new legal framework. The new tariffs are being pursued under Section 301 of the Trade Act of 1974, citing alleged forced labor practices. This legal shift increases the risk of tariffs becoming a permanent policy tool.
5Tariff Scope Widens
The new tariffs affect 99.4% of American imports. Countries that have adopted or committed to introducing prohibitions face a 10% duty, while those that haven't are subject to a 12.5% charge. Alan Siow, co-head of EM corporate debt at Ninety One Asset Management, notes that the White House appears to be adapting to these legal constraints, emboldened by limited retaliation and no clear inflation spike.
6Anticipating Other Countries' Responses
Alan Siow expects other countries to respond more measuredly initially, reserving escalation until the policy's impact becomes clearer. This suggests that global trade wars could persist longer. Martin Jacob, professor at IESE Business School, highlights the White House's ambition to make tariffs a lasting feature of U.S. economic policy.
7A Structural Risk for Markets
Matthew Ryan, head of market strategy at Ebury, warns that the new tariffs risk creating a structural pressure point for markets. The adoption of Section 301 removes the legal vulnerability that allowed the Supreme Court to strike down previous tariffs. This means markets may need to price tariffs as a structural drag on global growth rather than a transient risk.
8Impact on Fed's Interest Rate Policy
Matthew Ryan notes that the recent jump in oil prices raises the possibility of the Federal Reserve hiking interest rates later this year. This marks a shift from earlier expectations of holding rates steady through year-end before cutting in 2027. Policymakers are expected to keep the option of a rate hike open, adding another layer of uncertainty to global markets.
Original article: US Top News and Analysis — Trump'ın yeni tarife hamlesi neden bu kez farklı?