The idea that the trade shock has happened and is now bedding down as a given may be wide of the mark
AFTER a period of relative calm through the Northern summer, businesses are bracing for a nervier winter, a return of trade and economic uncertainty, and higher financial market volatility to boot.
In some respects, the last few months may have been a bit of a phoney trade war – not unlike the eight-month “Phoney War” after the start of World War Two in 1939 when no major military activity actually took place.
As most US tariffs only really hit in earnest from August, government data has yet to pick up any lasting impact and the shutdown dropped a veil on all new releases two weeks ago. Not only does that inject considerable fog into the piece, it also raises the jarring prospect of numerous economic releases hitting markets all in one go – whenever government is allowed back to work. Everyone from the Federal Reserve chair down to Wall Street economists is still unsure about just how the biggest US tariff rises in a century will pan out.
