Iran war may set limits on how far US tariff war will go
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The Iran war may limit the US tariff war as higher energy prices feed into US inflation, making it harder to justify raising duties further. The conflict has already led to a ceasefire and a reopening of the Strait of Hormuz, but energy supply remains below normal levels, putting sustained pressure on prices.
The Iran war has led to a ceasefire and a reopening of the Strait of Hormuz. Oil prices fell on the news, but a full recovery is not imminent. Energy supply will remain below normal levels, putting pressure on prices. The economic damage from the war will be long-lasting. The effects are spreading beyond crude, hitting petrochemicals and fertilizers. Governments are stepping in to shield households and firms. The slow pass-through to core inflation will be slower, but more persistent. Higher energy costs will feed into transport, logistics, and operating expenses, pushing up costs across the wider economy.
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