Trump Resumes Tariff Offensive: Experts Say Tariffs Have Become 'Permanent and Institutionalized'

As the U.S.-Iran military conflict enters its sixth month, President Trump has once again shifted his focus to the familiar arena of global trade. Last week, the White House officially launched a new round of large-scale tariff measures, imposing rates between 10% and 12.5% on 60 trading partners, including the European Union, China, the United Kingdom, and Canada.

These new tariffs are designed to replace the previous 10% baseline tariff, which expired on July 24, and will impact 99.4% of all U.S. imported goods.

The most significant difference in this latest round of tariffs lies in the legal basis. After the U.S. Supreme Court ruled in February that previous tariffs were unlawful, the Trump administration has now pivoted to Section 301 of the Trade Act of 1974, justifying the sanctions on grounds of 'forced labor' practices. Analysts note this move effectively closes prior legal loopholes, signaling to markets that tariffs are no longer short-term negotiation tools but are evolving into a 'permanent and institutionalized' structural feature of U.S. economic policy.

Emma Moriarty, Portfolio Manager at CG Asset Management, said the new tariffs carry two key implications: 'Not only does this show the Trump administration’s continued commitment to imposing tariffs, but it also demonstrates their persistence amid growing global energy shocks and worsening supply chain bottlenecks.'

The current tariff offensive comes at a time of heightened global energy volatility and worsening supply chain constraints. The Middle East conflict has pushed oil prices back to the $100 per barrel mark, further eroding market confidence.

While initial market reaction on Friday was muted—largely because investors had already anticipated a replacement for the expiring tariffs, in contrast to the sharp market decline triggered by the April 2025 'Liberation Day' tariffs—Moriarty emphasized that investors must now prepare for asset repricing under a 'low-growth, high-inflation' economic regime.

The price pressures from tariffs and soaring oil prices are also disrupting Federal Reserve (Fed) rate expectations. Markets had initially expected the Fed to hold rates steady through year-end and begin cutting in 2027. However, due to recent inflation risks, policymakers are now far more likely to retain the option of further rate hikes.

Russ Mould, Investment Director at AJ Bell, stated, 'While this outcome won’t come as a complete surprise to markets, sentiment has already been strained by renewed conflict between the U.S. and Iran and concerns over technology sector spending levels. This is undoubtedly another unwelcome source of uncertainty.'