#tariffs-and-trade-investigation

#tariffs-and-trade-investigation

The US dollar returned to the upside as geopolitical fears rebounded after US President Trump's address to the nation. The rhetoric fuelled risk aversion and flows toward the dollar while oil prices surged.

The International Monetary Fund has warned mounting geopolitical tensions and an escalation of Donald Trump's tariff war could hit global economic growth and trigger a backlash in financial markets. In an update as Trump threatens to impose tariffs on Nato allies opposed to his ambitions in Greenland, the Washington-based fund said a renewed eruption in trade tensions was among the biggest risks to global growth in 2026.

For the European Commission president, Ursula von der Leyen, the EU's trade pact with India was the mother of all deals. Seen from the other end of the telescope, it looked like the mouse of all deals, with just 4bn (3.5bn) in tariff reductions a rounding error in a 180bn trading relationship. But that misses the point: this is about economic heavyweights resetting the terms of their cooperation because of Donald Trump's use of tariffs as a tool of economic and political compulsion.

Trump previously said he was implementing the new baseline duty under Section 122 of the Trade Act of 1974, which grants the president unilateral ability to impose tariffs. But the untested legal provision puts a 150-day limit on how long the duties can remain in place. Congress would need to approve any extension. The Supreme Court, in a 6-3 decision handed down earlier Friday, ruled that Trump's use of a decades-old federal emergency-powers law to impose his so-called "reciprocal" tariffs was unlawful.

President Trump hates the United States' trade deficit. Indeed, he is so concerned about the "economic and national security risks" the deficit creates that he imposed a tariff regime that raised geopolitical tensions across the globe.The only problem is that his tariffs don't appear to be rebalancing the huge volume of goods and services the U.S. imports, versus its declining exports.