Chinese stocks plunge as fears of global trade war mount

The global tariff shock is likely to worsen before it improves, according to UBS.

While an about-face from the Trump administration or court injunctions reversing the levies are possibilities, the Swiss bank expects that “in the near term we think it is more likely that [the] news flow continues to worsen, including potential EU retaliation, US counter-retaliation on China, and an end to exemptions on pharmaceuticals and semiconductors”.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said tariffs could rise further initially, followed by reductions in levies during the third quarter “as legal, business and political pressure mounts”.

He forecast that the Fed would cut interest rates by 75-100 basis points to support the economy.