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Investing.com — The timeline for a possible new commerce battle, as mentioned by analysts at UBS, seems to hinge on a multi-phased course of reflecting each political maneuvering and financial impacts.
UBS analysts categorize the development into distinct phases which might be more likely to unfold all through 2025, beginning with what they time period the “tweet part,” escalating to the “imposition part,” and ultimately transitioning into the “impression part.”
The “tweet part,” in line with UBS, is already underway, characterised by public declarations and calls for by social media.
These early-stage bulletins typically serve to outline negotiating positions and apply strain on commerce companions even earlier than official actions are undertaken.
The “imposition part” is predicted to start within the first quarter of 2025. Throughout this stage, authorized groundwork will likely be laid for imposing tariffs, requiring procedural steps, public commentary, and time for drafting measures that may face up to authorized scrutiny.
UBS anticipates that whereas some preparatory work might already be underway, the timeline for this part will rely on administrative priorities and the necessity for meticulous implementation.
Following the imposition, the “impression part” is projected to start from the second quarter onward.
UBS notes that companies, conscious of the dangers, are more likely to interact in stockpiling and stock administration to mitigate short-term disruptions. Nevertheless, the broader financial results, corresponding to lowered commerce volumes and slowed development, might manifest even earlier than company earnings mirror the total brunt of tariff-related prices.
A parallel “negotiation part” is predicted to persist all year long. UBS highlights the probability of ongoing talks between commerce companions aimed toward both defusing tensions or responding with retaliatory measures.
As an illustration, latest strikes by China to limit exports of important metals in response to U.S. actions underline how commerce insurance policies might stay extremely transactional and topic to abrupt shifts.
Regardless of the uncertainty, UBS analysts additionally emphasize that the response from international markets and commerce companions might considerably form the trajectory of this battle. They cite President-elect Donald Trump’s threats to impose 100% tariffs on BRICS international locations until particular situations are met, a transfer they deem unlikely to materialize however indicative of the heightened rhetoric surrounding commerce coverage.
Along with the timeline, UBS supplies perception into the potential financial implications of recent tariffs. Rising market currencies, notably the Chinese language yuan, are anticipated to expertise elevated volatility and strain because of lowered commerce volumes and investor threat aversion.
The yuan might face extra stress, much like patterns noticed throughout prior commerce tensions, although interventions by China’s central financial institution are seemingly to offer some degree of stabilization.
The notice additionally examines how these dynamics intersect with broader financial insurance policies, together with the Federal Reserve’s rate-cutting technique and the impression on the U.S. Treasury yields.
UBS warns that extra in depth tariffs might threat stagflation—a poisonous mixture of excessive inflation and low development—although their baseline state of affairs suggests reasonable inflationary results.
