According to analysts at Bank of America (BofA), the boundaries of so-called normality in today’s global trade are rather blurred. In a constantly changing world, anything is possible. Moreover, the global economy has been getting immune to all kinds of shocks.
Although uncertainty surrounding tariffs has somewhat ebbed away, it is still measured above the baseline level of the past seven years. This means that companies and investors have to operate in unstable conditions that are unlikely to change anytime soon.
As BofA analysts observe, market volatility remains extremely high. According to the bank, the level of trade uncertainty reached nine standard deviations above the average at the beginning of 2025— and that is not the limit.
Recent trade deals between the US, Europe, and Asia have somehow resolved this uncertainty, but it remains one to two standard deviations above the norm. “That’s enough to restrain capital expenditures and growth,” the bank believes.
However, a key issue remains the ambiguity and weak enforcement of trade agreements. “They provide positive communiques but leave room for flare-ups and renegotiations,” BofA says.
The anticipated ruling by the US Supreme Court on the legality of tariffs imposed under emergency powers further adds to the unpredictability. Experts estimate that protracted trade uncertainty reduces business investment by nearly 1 percentage point over three quarters.
“In addition to the effective tariff rates, the impact of this uncertainty is a key component of the economic outlook, especially through the reduction of corporate spending,” BofA emphasizes. The bank is convinced that optimism about trade disputes resolving themselves is misplaced. Elevated levels of uncertainty remain in Canada and Mexico, while markets such as Brazil continue to experience anxiety.
“In the current environment, heightened uncertainty becomes a baseline in itself. Companies evaluating new factories or supply chains are operating in a state of doubt,” the experts summarize. Ultimately, the main burden of these costs will fall on consumers. BofA believes that the promise of a ‘new normal’ in trade looks less like stability and more like “constant anxiety, with or without cause.”
