Legal developments may not meaningfully affect US trade policy: BMI

Even if the original rulings that President Trump overstepped his authority in imposing 'reciprocal' tariffs fail, the administration has many alternative legal tools to impose broadly comparable punitive measures, BMI noted in a commentary.

The court rulings would, however, limit the ability of the President to significantly re-escalate tensions, it observed.

Some countries may slow the pace of negotiations till there is more clarity, but “they have little incentive to antagonise” US officials given that Trump still has recourse to a range of alternative tariffs, it said.

There is every possibility that the administration's appeal will succeed, and BMI believes that the United States will strike ‘deals’ with its major trade partners over the second half this year that will see the eventual effective tariff rate settle at around 13 per cent.

“We expect that the US will slow sharply this year, but that the economy will probably avoid a recession,” the BMI commentary said.

“What the court ruling has done is to further some of the downside risks facing the US economy, though the price action since mid-April suggests that these are not risks that investors are particularly concerned about,” it added.

ALCHEMPro News Desk (DS)