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Investing.com - Sweeping U.S. tariffs are likely to remain heightened despite a range of legal challenges facing the duties, according to analysts at UBS.
U.S. President Donald Trump has slapped punishing levies on a host of countries, as he looks to address perceived trade imbalances, reshore lost manufacturing jobs, and bolster government revenues.
Although many of Trump’s elevated so-called "reciprocal" tariffs have been temporarily delayed while White House officials attempt to forge bespoke trade deals with dozens of individual nations, a baseline 10% tariff and levies on items like steel and aluminum remain in effect.
Still, the tariffs are mired in legal limbo, particularly after the U.S. Court of International Trade ruled that Trump went beyond his authority by instituting the duties.
A federal appeals court later granted a request from the White House to temporarily halt the ruling, but the legal future of one of Trump’s signature policies is uncertain -- and could end up in the U.S. Supreme Court.
"Even if the Supreme Court permanently upholds the Court of International Trade’s decision, as we expect, the administration has many legal pathways available to rebuild the tariffs," the UBS analysts said in a note to clients.
The strategists added that they expect the effective U.S. tariff rate to end the year at around 15%, roughly where it currently stands, and far above where it was at the start of Trump’s second term in office.
"Tariffs will likely remain high, as will the headline risk, but possible sudden changes in tariff negotiations and threats are becoming normalized the longer this trade war lasts," the UBS analysts said, predicting that they do not expect the ongoing tensions to end in the total collapse of the global trading system.
Instead, the U.S. will increasingly turn to focusing its tariff pressure on countries where recent negotiations have stalled, such as the European Union, the UBS analysts argued.