{"id":434295,"date":"2026-07-22T12:17:14","date_gmt":"2026-07-22T05:17:14","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/trade-wars-are-back-on-the-agenda-434295\/"},"modified":"2026-07-22T12:17:14","modified_gmt":"2026-07-22T05:17:14","slug":"trade-wars-are-back-on-the-agenda","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/trade-wars-are-back-on-the-agenda-434295\/","title":{"rendered":"Trade wars are back on the agenda"},"content":{"rendered":"
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\ufeff<\/p>\n<\/p>\n

As if rising energy prices weren\u2019t already causing enough headaches amid another closure of the Strait of Hormuz, trade wars have also returned to the forefront.<\/p>\n

On Monday, the U.S. president imposed additional 50% tariffs on imports of a wide range of products from Canada, \u201cin response to the continued discrimination against U.S. products.\u201d Now, given that the U.S. has not yet reached trade agreements with all countries, we may see more news like this in the future.<\/p>\n

Should we expect higher inflation?<\/p>\n

The July figures are already likely to be disappointing, given that diesel prices in the U.S. have once again surpassed $5 per gallon amid renewed tensions in the Middle East.<\/p>\n

The logic is simple: when diesel prices rise, the cost of transporting goods increases. Companies face higher expenses and, little by little, pass those costs on to consumers. As a result, prices rise not only for fuel, but also for food, goods, and services.<\/p>\n

Now, the issue goes beyond a potential oil shortage, as Russia has restricted diesel exports while China has cut back on refining and fuel supply, meaning reopening the Strait of Hormuz alone might not be enough.<\/p>\n

As for tariffs, a Harvard Business School study<\/a> showed that consumers shouldered 43% of the burden in the seven months after the U.S. imposed sweeping tariffs, while companies absorbed much of the rest through lower profit margins.<\/p>\n

Thus, if an energy shock adds to existing trade pressures, inflation could become persistent again, forcing the Federal Reserve to raise interest rates after all.<\/p>\n

For context, markets currently price a 54% probability of a 25-basis-point rate hike in September.<\/p>\n

Still, judging by the continued optimism in U.S. stock indexes, including the S&P 500<\/a>, Nasdaq and Dow Jones<\/a>, investors don\u2019t seem to believe these developments will have a major impact on the economy. But as the saying goes, appetite often grows with eating.<\/p>\n

What could change the sentiment?<\/p>\n

If Goldman Sachs Group Inc.\u2019s scenario of Brent crude rising above $120 per barrel by the fourth quarter plays out, markets may start pricing in more rate hikes, and the mood could shift quickly.<\/p>\n

\u00a0<\/p>\n

P.S. In his first testimony before Congress, Kevin Warsh made clear that bringing inflation back to 2% remains the priority and that the Fed will not tolerate high inflation for long, suggesting that the central bank\u2019s stance won\u2019t soften simply because of a change in leadership.<\/p>\n<\/p>\n

\ufeff<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

\ufeff As if rising energy prices weren\u2019t already causing enough headaches amid another closure of the Strait of Hormuz, trade wars have also returned to the forefront. On Monday, the U.S. president…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-434295","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/434295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=434295"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/434295\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=434295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=434295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=434295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}