UBS analysts have outlined a potential multi-phase progression for a trade war that could unfold throughout 2025. This scenario reflects political strategies, legal frameworks, and economic consequences likely to arise as trade tensions escalate.
Key Stages of Progression
Tweet Phase
Current Status: This stage is already underway.
Characteristics:
Public declarations and demands, particularly on social media platforms.
These announcements often serve as initial posturing, aimed at signaling intent and influencing negotiations without enacting formal measures.
Objective: To build public and diplomatic pressure on trade partners, setting the tone for further actions.
Imposition Phase
Expected Timeline: Q1 2025.
Activities:
Legal groundwork for imposing tariffs, including procedural steps and public commentary.
Drafting policies to ensure compliance with international trade laws.
Factors Influencing Progress: Administrative priorities, political agendas, and the need for detailed implementation.
Impact Phase
Projected Start: Q2 2025 onward.
Initial Responses:
Businesses engaging in stockpiling and inventory adjustments to mitigate disruptions.
Broader Effects:
Reduced trade volumes, economic slowdowns, and gradual reflections of tariff-related costs in corporate earnings.
Negotiation Phase (Parallel to Other Stages)
Ongoing discussions between trade partners to:
Defuse tensions and resolve disputes.
Implement retaliatory measures if negotiations fail.
Implications for Businesses and Investors
Preparation: Companies should anticipate inventory disruptions and consider strategies to mitigate supply chain risks.
Market Insights: Investors can leverage tools like the Sector Historical Overview API to assess historical responses of industries to similar events.
Economic Outlook
The imposition and impact of tariffs often ripple through global economies, influencing trade volumes and growth patterns. Monitoring key financial ratios of affected sectors through the Sector P/E Ratio API can provide valuable insights for decision-making.
Conclusion
While the timeline of a trade war remains speculative, businesses and investors can better prepare by understanding the phases outlined by UBS. Remaining adaptive to changing circumstances will be critical in navigating potential economic disruptions.