Asian stock markets rose and the dollar strengthened after the ruling from the US International Trade Court, which means that import tariffs are blocked. But the message also adds another uncertainty factor, he believes.
We have been in a high degree of uncertainty around trade policy for several months. Now, for many companies, another element of uncertainty has been added, and it is linked to the judiciary.
Risk of reduced demand
He believes that the major risk, after all the twists and turns with tariffs and now the trade court's decision, is that companies' customers will become cautious, which will negatively affect demand. My biggest concern regarding the business cycle, and which I think the market underestimates, is that companies say they can handle tariffs, as long as they know what they look like. The really big problem for many companies is the uncertainty, customers are getting into a situation where they want to wait and see, says Robert Bergqvist.
He says it was not unexpected that Trump's tariffs ended up in court. Trump has motivated his decision by saying that the US trade deficit constitutes a national threat, and has referred to an emergency law, which the court rejects.
The President can refer to national security and introduce this type of trade restrictions against individual countries. But it does not hold to say that an entire world constitutes a security policy risk for the US.
Strengthening the EU in negotiations
According to Bergqvist, the tariffs will apply until the current decision has gone through the legal system, possibly all the way up to the Supreme Court. If the tariffs are then deemed to be incorrect, they will be refunded to the companies.
On the other hand, the court ruling does not cover import tariffs on steel and aluminum, as they fall under a different law.
When it comes to the EU's and various countries' tariff negotiations with the US, the court ruling and the ongoing legal process mean a slight shift in the balance of power, Bergqvist believes.
They should feel that they have been strengthened a bit in terms of getting a trade agreement, he says.
