Investing.com -- "Normal" is proving slippery in global trade, says Bank of America.
While uncertainty around tariffs has cooled from its springtime peak, it still sits well above the pre-2018 baseline. That means companies and investors should get used to choppy conditions rather than count on calm.
BofA sees volatility spiking to nine standard deviations above average earlier this year, in its trade-uncertainty trackers. It follows news on trade across the world.
Recent deals between the U.S., Europe and Asia have pulled those readings down. But they remain one to two standard deviations above normal, enough to act as a brake on capital spending and growth.
The trouble is that today's agreements are vague and lightly enforced. They make for upbeat press releases, but leave much room for flare-ups and renegotiations.
A pending U.S. Supreme Court ruling on the legality of tariffs imposed under emergency powers adds another layer of unpredictability.
The consequences are real, with sustained rise in trade uncertainty can cut business investment by almost a full percentage point within three quarters, BofA cited its European research.
"Beyond effective tariff rates, the effect of uncertainty on itself can be a key component for the economic outlook, especially through lower corporate capex," analysts at BofA said.
The Federal Reserve has estimated that an earlier bout of trade tensions knocked 0.8% off global GDP. These are not minor dents.
The optimism that trade disputes could fade quietly is misplaced. Canada and Mexico still show elevated uncertainty, and emerging markets like Brazil remain jumpy. Even in regions where deals have calmed nerves, the fog of possible reversals lingers.
That suggests a world where elevated uncertainty itself becomes the baseline. Companies weighing new plants or supply chains will hesitate. Consumers may ultimately bear the cost through slower growth.
The promise of a "new normal" in trade looks less like stability, and more like permanent unease.