UBS: Trump invokes Trade Act Section 122 to impose tariffs, global uncertainty remains in the short term

Glonghui, February 24｜UBS released a research report stating that the U.S. Supreme Court has ruled the reciprocal IEEPA unconstitutional. As a result, the U.S. "retaliatory tariffs" on Chinese goods, "fentanyl tariffs," and border tariffs on Canada and Mexico have all been canceled. However, UBS U.S. economists expect that most IEEPA tariff measures can be re-implemented through other trade authorities. Currently, the U.S. government has shifted to invoking Section 122 of the 1974 Trade Act to impose a 15% temporary tariff on global trading partners for 150 days. However, UBS believes that the chances of Congress approving an extension of the Section 122 tariffs beyond 150 days are slim, and the U.S. government plans to launch more Section 301 investigations against selected major trading partners, as well as Section 232 investigations into specific import categories. Looking ahead, global uncertainty remains in the short term, including whether Section 122 tariffs will be extended, further Section 301/232 investigations, and the potential outcomes of China-U.S. trade negotiations during President Trump's visit to China. UBS believes that China will continue to communicate and negotiate with the U.S. to manage bilateral frictions, and will improve economic and trade relations with other non-U.S. trading partners through deepening opening-up measures and bilateral or multilateral trade negotiations.