Trade fragmentation / tariffs
Updated
What it is
Trade fragmentation refers to the real trend of countries increasingly restructuring trade relationships along geopolitical lines through tariffs, export controls and reshoring, rather than relying on globally integrated supply chains. Since 2025, US tariff policy has been a central driver of this trend, including tariffs imposed under the International Emergency Economic Powers Act. On February 20, 2026, the US Supreme Court ruled 6-3 that the Act did not authorize the broad country-specific tariffs the administration had imposed, a decision that immediately removed about 75% of existing tariffs and invalidated the legal basis for duties that had collected more than $130 billion.
Why it matters lately
Following the February 2026 ruling, the administration moved to pursue similar trade goals through other legal authorities, including global tariffs of around 10% with a stated aim of raising them toward 15%, keeping trade policy volatile through 2026. Analysts described the ruling as reintroducing a period of heightened policy uncertainty and stop-and-go tariff changes that complicate inventory management, even as some near-term estimates suggested a modestly disinflationary effect of about 0.1 percentage point on 2026 US inflation.
Asymmetric Analytics view
Inference (AA): AA treats this tariff- and fragmentation-driven policy volatility as one of two distinct 2025-2026 drivers of inflation-regime uncertainty, alongside the separate shipping-shock channel from Middle East tanker attacks.