Issue Risk: US trade policy uncertainty persists after the IEEPA tariff ruling

Summary

The second downside risk is that US trade policy stays unpredictable even after tariffs imposed under IEEPA were ruled unlawful. Washington has kept its America-centred stance by switching legal bases, imposing a temporary global import surcharge under Section 122 of the Trade Act of 1974, opening Section 301 investigations and keeping Section 232 tariffs. Recent pressure on the EU, including a stated plan to raise tariffs on EU cars and trucks, shows how tariffs can become entangled with security and alliance issues. The report expects the front-loading that supported trade in 2025 to fade, so tariff costs and uncertainty will show up more directly from 2026. Over time, supply chain relocation and market diversification could cause duplicated investment, lower efficiency and wider regional cost gaps, deepening fragmentation of the world economy.