ING Warns of Global Trade War: Risks Higher Than Last Year

Uncertainty in the Global Trade War Legal processes regarding customs tariffs in the United States and new tax decisions have once again escalated uncertainty in the global trade environment.
In an analysis prepared by Carsten Brzeski, ING Think's Global Head of Macro, and James Knightley, Chief International Economist, it was emphasized that the risk of escalation in the trade war is significantly higher than it was a year ago.
Legal Hurdles and New Tariff Decisions The US Supreme Court recently ruled that the International Emergency Economic Powers Act (IEEPA), which President Donald Trump relied on for customs duties, does not grant the president such authority.
However, this ruling did not lead to a step back in the tariff agenda.
Trump signed a decision under Section 122 of the Trade Act of 1974, which envisages a 10 percent global customs duty on all countries.
Shortly thereafter, it was announced that this rate would be increased to 15 percent, effective immediately.
Europe's Stance and Risk Analysis ING experts point out that when the recent approaches of European leaders are combined with the determined stance of the US, the probability of tension rising in the trade war has strengthened compared to last year.
The analysis states that despite legal obstacles, the customs tariff agenda will continue to remain a priority.
Long-Term Economic Impacts Expected Alan Taylor, an external member of the Bank of England's Monetary Policy Committee, predicts that high US import taxes could become permanent.
According to Taylor, it may take years for the full impact and structural consequences of these taxes on the global economic system to be felt.