US: Trade investigations sustain policy uncertainty – Commerzbank

Commerzbank’s FX & Commodity Analyst Volkmar Baur highlights that new US Section 301 investigations are designed to replace recently invalidated Section 122 tariffs and avoid their July expiry. The pre-announced completion before 27 July signals that tariffs will continue in some form, keeping trade-policy uncertainty elevated and potentially driving renewed foreign exchange volatility around mid‑year.

Section 301 probes to replace tariffs

"While the market is understandably focused primarily on developments in the Gulf region, the US government has launched two investigations under Section 301 of the Trade Act of 1974 in recent days. These are expected to replace the Section 122 tariffs that were introduced a few weeks ago because the tariffs under the International Emergency Economic Power Act (IEEPA) were declared invalid by the Supreme Court."

"The problem with Section 122 tariffs is not only that they are on shaky legal ground, but also that they are only valid for 150 days (i.e. until 27 July) as long as they are not being extended by Congress (which is unlikely)."

"It has already been announced that the investigations are to be completed before 27 July, which confirms that they are intended to replace the tariffs currently in force. There is therefore no question as to what the outcome of these investigations will be."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)